HAMP loan modification helps unemployed keep homesIf you’re unemployed and can no longer afford your mortgage, a new Making Home Affordable loan modification program might offer some relief.

The new Unemployed Program (UP) starts August 1, 2010, and it requires lenders to reduce or suspend payments for at least three months for eligible borrowers. It is at the lender’s discretion to extend the forbearance, and the program ends once the borrower gets a new job.

According to Supplemental Directive 10-04, mortgage servicers are required to offer an Unemployment Program forbearance plan to a borrower who meets the following criteria:

  1. The mortgage loan is secured by a one- to four-unit property, one unit of which is the borrower’s principal residence.
  2. The mortgage loan is a first-lien mortgage originated on or before January 1, 2009.
  3. The current unpaid principal balance of the mortgage loan is equal to or less than $729,750 for a single-family property. Higher loan amounts apply to two- to four-unit dwellings.
  4. The mortgage is delinquent or default is reasonably foreseeable.
  5. The mortgage loan has not been previously modified under the Home Affordable Modification Program (HAMP) and the borrower has not previously received an UP forbearance period.
  6. The borrower must make a request before the first mortgage lien is seriously delinquent (before three monthly payments are due and unpaid).
  7. The request for the Unemployment Program may be made by phone, mail, or email. Loan servicers must document the date of the request in the servicing file and confirm receipt of the request with the borrower via email or return mail within 10 business days.
  8. The borrower must be unemployed at the date of the request and can document that he or she will receive unemployment benefits in the month of the forbearance period effective date even if unemployment benefits will expire before the end of the forbearance period.

Your loan servicer can require that you receive unemployment benefits for three months before the forbearance period begins. And you won’t qualify if your total monthly mortgage payment is less than or equal to 31 percent of your monthly gross income, including unemployment benefits.

Also, servicers are not required to offer you the Unemployment Program if a household member who is not a borrower becomes unemployed, even if that income contributed to the mortgage payment.

In other words, if you’re the borrower but depend on income from your spouse, partner, parent, or child to make your payments and that person loses his or her job, you won’t qualify for the program.

You also won’t qualify if your mortgage, taxes, insurance, and homeowners’ association fee is equal to or less than 31 percent of your gross monthly household income, including unemployment insurance.

This new Making Home Affordable program was originally supposed to start on July 1, and I’m sure there will be any number of changes to the program before it really gets going. If there are changes, I’ll post them here.

Ilyce Glink is a best-selling author, real estate columnist, and web series host. She is the managing editor of the Equifax Finance Blog and CEO of Think Glink Media. Follow her on Twitter: @Glink

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