The Mortgage Bankers Association (MBA) has developed a concept for a new forbearance program that would allow qualified borrowers who had lost their jobs to remain in their homes while they seek new employment. Â Â
Under the terms of the program, loan servicers would reduce the borrower's mortgage payment to an affordable amount for up to nine months while the homeowner looked for employment. Borrowers would be initially evaluated for the forbearance program using a model that assumes the borrower will be reemployed within nine months of losing his or her job at 75% of the borrower's previous salary.
The borrower would be reevaluated as to employment and income status every three months for a total forbearance of nine months, and would then be qualified for participation in the Home Affordable Modification Program once he or she is reemployed.
‘The vast majority of new distressed borrowers we are seeing involve the loss of income,’ says John A. Courson, MBA's president and CEO. ‘This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.’
SOURCE: Mortgage Bankers Association