Unemployed Homeowners And Mortgage Forbearance Plans–Will Banks Begin To Offer More Assistance?

Unemployed homeowners in need of home loan assistance have had the opportunity to acquire mortgage forbearance plans and alternative programs to prevent the loss of a home when the homeowner has faced job loss and financial strain as result. However, there are questions as to whether more banks will begin using these unemployment forbearance programs in 2011 as unemployment remains high, difficulties like underwater mortgages remain present, and options like short sales may be more widely promoted by financial institutions in the coming months.

Obviously, one of the more popular unemployment home loan assistance programs is the federal Unemployment Program, which is an extension of the Making Home Affordable Plan. According to the guidelines for the Unemployment Program, homeowners who are eligible for unemployment benefits and may not qualify for a home loan modification could receive assistance from this program as, again, this is one of the foreclosure prevention efforts that are being made available to homeowners within the Making Home Affordable initiative. Essentially, homeowners who qualify for the Home Affordable Unemployment Program will either be given forbearance from their monthly mortgage payments or can have their payments reduced to a more affordable level.

However, there are also state-specific plans from the Hardest Hit Fund, which are hoped to also address issues that unemployed homeowners may have in areas and states that have been particularly troubled by economic downturns and unemployment. According to the Making Home Affordable website, these two unemployed homeowner assistance options are available to a wide number of homeowners, but there are questions as to whether servicers will continue to use these options in the coming months as some feel that they are only preventing the inevitable in cases where homeowners cannot afford their mortgage payment.

There have been predictions that more mortgage servicers will begin using short sales as a way to help homeowners in need who are suffering from underwater mortgages, unemployment, or other financial difficulties. Obviously, homeowners can participate in a deed in lieu of foreclosure plan or a short sale if they are unable to continue making their mortgage payments and may be in a difficult position, in terms of their home’s value.

It has been predicted that more servicers are going to provide these alternatives to foreclosure in higher number during 2011, but some homeowners worried that they may have to either surrender the deed to their home or sell their home, rather than finding a solution that would allow them to avoid the loss of their house. However, servicers who are participating in the Making Home Affordable Program are usually required to explore these foreclosure prevention options for homeowners in the hopes of allowing them to stay in their property, rather than turning to short sales or foreclosure as a result. Yet, despite the fact that the Unemployment Program and Hardest Hit Fund are still in place and can be beneficial to jobless homeowners, it must be remembered that these plans are no guarantee to prevent foreclosure and, as a result, homeowners may have to explore alternative options that can help them avoid a formal foreclosure process.