No mortgage mods for many of the jobless
29.09.2010 00:00
No mortgage mods for many of the jobless
By Tami Luhby, senior writerSeptember 23, 2010: 12:11 PM ETNEW YORK (CNNMoney.com) -- Unemployed homeowners cannot count jobless benefits as income when applying for mortgage modifications if they have loans backed by Fannie Mae. That could greatly limit their ability to get a long-term reduction in their monthly payments.
Because the jobless benefits can't be considered permanent income, the lender will instead evaluate troubled borrowers for forbearance plans of up to six months. The new guidelines, released Tuesday, will take effect Nov. 1.
"We don't want to set up borrowers to fail, said Amy Bonitatibus, Fannie Mae spokeswoman.
Fannie Mae's announcement broadens a ban already put in place from the Treasury Department. In July, the agency quit allowing unemployment insurance to be used as income when applying for the administration's signature Home Affordable Modification Program, known as HAMP. Previously, borrowers had been allowed to do so.
Now, the unemployed who apply for HAMP are plans, which can reduce or suspend their payments for at least three months.
Fannie Mae (, )'s new stance also prevents banks from using unemployment benefits in their own proprietary modification programs if the loan is backed by the mortgage finance company.
The unemployed account for most of the new delinquencies in the mortgage market, experts say. Many depended on using their jobless benefits to qualify them for modifications.
However, the growing focus on the sustainability of these modifications have raised questions about counting temporary benefits as an income source. Instead, the government and many banks have set up alternate programs for the jobless, such as forbearance.
Non-HAMP bank modifications are growing in importance as the government initiative loses steam. Nearly 449,000 people have received permanent modifications under HAMP through August, up from nearly , according to federal data released Wednesday.
Another 46,700 people fell out of the HAMP program in August, bringing the total to roughly 664,000. Some 26,600 entered the effort in the trial phase. Some 202,500 borrowers are in the trial period as loan servicers evaluate their ability to keep up with the lowered payments.
Of those who fall out of the program, some 44.5% of them receive other types of modifications from their servicers. But a growing number of them, 13.4%, wind up in foreclosure.
#cnnfb_connect {background-color:#f5f5f5;width:auto;height:auto;padding:10px;clear:both;} First Published: September 22, 2010: 6:18 PM ETRight Now
Census report reveals widespread income erosion. Washington metro area household income now the highest in the nation. Toy expert Jim Silver shows off the 16 toys he says are must-haves this holiday season. Bans enacted in four states resulted in a slight increase in crash-related claims.
by
Scott Cook, co-founder of the financial software company, recounts how the company ran out of money before hitting it big. Jason Rosenthal, CEO of Ning, explains why he thinks his company is a better option than Facebook for businesses. Steven Rattner says that before the bailout, General Motors suffered from disorganized accounting and 'shocking' management.
| Markets | Last | Change | % Change |
|---|---|---|---|
| 10,859.80 | 47.76 | 0.44% | |
| 2,378.98 | 9.21 | 0.39% | |
| 1,147.69 | 5.53 | 0.48% | |
| 2.46 | -0.06 | -2.42% | |
| 1.36 | 0.01 | 1.05% |
| Company | Price | Change | % Change |
|---|---|---|---|
| 3.88 | 0.01 | 0.26% | |
| 13.25 | 0.01 | 0.08% | |
| 21.90 | -0.21 | -0.95% | |
| 19.51 | 0.28 | 1.43% | |
| 24.69 | -0.04 | -0.17% |
Sections
Regulators tell Johnson & Johnson, CVS and Walgreens to stop product claims that their mouth rinses remove plaque or prevent gum disease. | CEOs forecast more capital spending, but lower expectations for sales and employment. | The deal brings AOL another marquee tech blog to complement Engadget. Terms of the deal were not disclosed. | One week after the Senate finally manages to pass the bill, the House quickly pushes it through. Next stop: President's desk. | Credit card debt levels have been dropping since the start of this economic crisis. Before you pat yourself on the back, though, check out the reasons why. |
Please create a screen name to access this feature.
Screen name (Select one with 3-12 characters; Numbers and letters only)
Forgot password
Enter your e-mail address below and we will send you an e-mail with a link and code to reset your password.
Password selection
Reset code
New password
Log in & let's get started!
Password
Remember me for two weeksNot a member yet?
Sign up or
Screen name
Select one with 3-12 characters;Numbers and letters only
You will receive an e-mail to validate your account
Password
Make it 6-10 characters, no spacesType what you see in the grey box
If you can't read this,Yes, I would like to receive occasional CNNMoney member updates about new features and special offers.
CNNMoney will use the information you submit in a manner consistent with our . By clicking on "sign up" you agree with and and consent to the collection, storage and use of this information in the U.S. subject to U.S. laws and regulations. ()
For our international users, please be aware that the information you submit when registering for our services is collected in the United States of America. In addition to being subject to our Privacy Policy, the collection, storage, and use of your data will be subject to U.S. laws and regulations, which may be different from the laws and regulations of your home country. By registering for this service, you are consenting to this collection, storage, and use.
We're Sorry!
This service is temporarily unavailable. Please try again soon.
Thanks!
Please check your e-mail and click the link to confirm your membership. Then, you'll be ready to participate in all activities and conversations on our site.
Add comment