Fannie and Freddie: Loan Modifications off Limits for Unemployed Homeowners
Even though millions of Americans have lost their jobs as a result of the recession, many have still been able to qualify for a mortgage loan modification. This is because their unemployment benefits were allowed to be considered income on their application.
However, new regulations coming from Fannie Mae and Freddie Mac (going into effect on November 1) will no longer permit unemployment benefits to be used as income on a loan modification.
This move by the nation’s two largest mortgage giants comes on the heels of similar policies enacted by the Treasury Department over the summer. In this case, jobless benefits were no longer considered for those seeking assistance under the Home Affordable Modification Program (HAMP). This was seen as a blow to the Obama Administration which had been relying heavily on HAMP to stem the tide of foreclosures.
Although loan modifications will now be prohibited for those who seek to utilize unemployment benefits, unemployed homeowners may still qualify for temporary reductions in their mortgages. And, in some extreme cases, homeowners may be able to have their payments suspended altogether.
Experts warn that since the landscape is ever-changing, those who are considering loan modification (but are unemployed) should consult with their lender for clarifications on the latest federal policies.
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