If you’ve been hit by double trouble in the form of unemployment and mortgage woes, the Federal Deposit Insurance Corp. (FDIC) has some good news for you. The FDIC is encouraging some banks to reduce mortgage payments for unemployed or underemployed people. The minimum period is pegged at six months.
Only certain banks are being encouraged to do this, mostly those that failed in the past and are in loss-share agreements with the FDIC. Most of these banks are regional or community banks.
This program comes as a possible solution to the combined problem of unemployment and mortgage trouble. These two tend to magnify each other, as the jobless usually have no money to pay mortgage.
The main idea for the FDIC’s reduced payment program is through forbearance plans. Typically, these will reduce mortgage payments for a few months, and then the balance of the time under reduced payment would have to be given within a year. The FDIC, however, endorses the idea of the balance being spread over the life of the loan. While this may extend the loan’s lifetime, it will also give unemployed homeowners more breathing room while looking for a job.
If the borrower cannot afford their payments even when they get new jobs, the FDIC is willing to offer loan modification if they qualify for the program. Eligible borrowers would have their monthly payments reduced to 31% of their income before taxes, if the move would cost less than foreclosing their homes. Both the forbearance and modification plans are aimed at reducing the number of foreclosures, specifically foreclosures that the FDIC thinks could have been preventable.
Sign on the box at the right to get more information on how you can lower your mortgage payments through loan modification.
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