For homeowners, an unexpected job loss can be a unpleasant obstacle in the way of obtaining a home loan modification due to the fact that lenders require homeowners to possess an income sufficient enough to comfortably repay a modified mortgage loan. Through the Making Home Affordable program, the federal government offers temporary loan modification to unemployed individuals to help them avoid foreclosure while seeking new employment.
Home Loan Modification for the Unemployed
Unemployed homeowners can apply for a forbearance plan through Making Home Affordable. The goal of the forbearance plan is to give the homeowner manageable mortgage payments until he can find employment. Restructured mortgage payments can continue for a minimum of three months and maximum of six months.
A homeowner who becomes unemployed and is interested in applying for a temporary mortgage loan modification while seeking new employment can check with his mortgage lender to determine whether the lender currently participates in the Making Home Affordable program. All participating lenders are required to provide unemployed homeowners who qualify with a temporary government loan modification for the maximum amount of time specified or until the individual finds new employment.
See: How to Write An Impressive Resume for a Job Hunt
Qualifications for Temporary Home Loan Modification
Unfortunately, an individual losing his job isn’t enough to automatically qualify him for a temporary home loan modification under Making Home Affordable--even if his mortgage lender participates in the program. The following criteria must be met before unemployment can result in a modified mortgage loan:
- The homeowner must occupy the house he seeks a modification for
- The mortgage loan balance must be below $729,750
- The mortgage loan must have been granted before January 1, 2009
- The homeowner can provide proof of unemployment payments
- The mortgage loan is no more than 90 days delinquent
Lack of Employment at the End of the Six Month Loan Modification
Should the borrower be unable to find suitable employment by the time the temporary loan modification ends, he may continue to seek government help, but not in the form of restructured mortgage payments.
The Home Affordable Modification Program (HAMP) is a feature of Making Home Affordable. This program includes more than just loan restructuring. It also assists borrowers who cannot meet loan modification requirements to obtain a short sale or deed in lieu of foreclosure from their lenders. Through a short sale, the borrower works with his lender to sell his home for less than the outstanding loan balance. A deed in lieu of foreclosure is similar, but allows the homeowner to turn over his mortgage deed to the lender and walk away from his loan obligation.
See: Stall Foreclosure Proceedings With Bankruptcy or Produce the Note
Although both options can leave a former homeowner with significant credit damage, most individuals prefer these options to the trauma of losing their homes to foreclosure. In addition, should the unemployed homeowner find employment during negotiations, he may opt to reapply for a government loan modification rather than turning over the property to the lender.
Source:
Candice Edwards - Candice Gillingwater is a credit specialist and consumer advocate currently living in Georgia. Her goal is to educate the public about ...
