Fannie Mae Helps Unemployed Homeowners

?Following a similar move made by mortgage giant Freddie Mac, unemployed borrowers who have their mortgages owned or guaranteed by Fannie Mae may be eligible for up to 12 months of forbearance starting March 1, 2012. The new Fannie Mae policy mirrors Freddie Mac’s move to double the existing forbearance policy’s eligibility period and allows mortgage service companies to approve unemployed borrowers for six months of mortgage forbearance without prior approval from Fannie Mae. They can also approve extending the forbearance period for an additional six months with prior Fannie Mae approval, giving eligible unemployed borrowers a possible one full year of forbearance.

This is good news for holders of mortgages owned or guaranteed by both Fannie Mae and Freddie Mac, as prior to the policy changes mortgage service companies were only allowed to grant up to three months of mortgage forbearance with no payment and without prior approval, or six months at a reduced payment with prior approval.

Those mortgage borrowers who are already enrolled in a Fannie Mae Home Affordable Modification Program (HAMP) or non-HAMP trial period plan may also be eligible for Unemployment Forbearance if they become unemployed during the trial period. They may also be eligible for a loan modification upon successful completion of the terms of the Unemployment Forbearance period because the HAMP was designed to help homeowners who are in default and those at risk of default by providing more affordable monthly payments.

Generally speaking, a mortgage borrower is eligible for Fannie Mae’s Unemployment Forbearance program subject to the following conditions:

The property must be a principal residence and cannot be vacant, condemned, or abandoned.
Second homes and investment properties are not eligible under the program.
The borrower must exhibit a financial hardship due to unemployment.
The borrower can be delinquent or in default.
FHA, VA, or Rural Housing mortgage loans are not eligible.
A Fannie Mae borrower must also meet the following conditions in order to qualify for an extension of his Unemployment Forbearance program:

The borrower must meet all terms and conditions as required on the current forbearance plan.
The borrower’s cash reserves cannot exceed 12 months of the borrower’s average monthly housing expenses.
The borrower’s current monthly housing expense to income ratio must be greater than 31% (unemployment benefits are excluded).
For more information on the specific terms and requirements of the Fannie Mae Unemployment Forbearance program, visit Fannie Mae’s website at fanniemae.com.