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With no sustained pickup in the job market, over six million Americans have been unemployed for longer than 27 weeks. Such extended periods of joblessness remain the predominant force behind the industry’s high volume of seriously past-due mortgages.

With these realities weighing on an already fragile market, the federal government said Thursday that it will extend mortgage relief for unemployed homeowners to a year under the Federal Housing Administration (FHA) and Making Home Affordable (MHA) programs.

For those with an FHA loan, the administration is requiring servicers to extend the forbearance period for unemployed homeowners from four to 12 months. The agency says it will also remove upfront hurdles to make it easier for borrowers who’ve lost their jobs to qualify for FHA’s special forbearance program.

All FHA-approved servicers must participate in the agency’s loss mitigation program, which includes the special forbearance program. FHA also reemphasized its requirement that servicers conduct a review at the end of the forbearance period to evaluate the borrower for all applicable foreclosure assistance programs and notify the borrower in writing whether or not they qualify for additional help.

The administration also intends to require servicers participating in MHA to extend the minimum forbearance period offered under the Home Affordable Unemployment Program (UP) from three to 12 months wherever possible under regulator and investor guidelines. Additionally, forbearance under UP will become available to borrowers who are seriously delinquent.

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DS News On Monday, the Florida Housing Finance Corporationwill launch a pilot program to offer financial assistance to unemployed and underemployed homeowners who are having difficulty paying their mortgages.

State housing finance agencies across the country have received money through the federal government’s Hardest Hit Fund to develop targeted foreclosure-prevention initiatives in their local communities.

The pilot being rolled out by Florida Housing Finance Corp. will test the waters for the Sunshine State’s planned use of its federal dollars.

The effort is two-fold. The Unemployment Mortgage Assistance Program (UMAP) will provide up to 18 months of first mortgage payments directly to the lender on behalf of unemployed/underemployed homeowners until they can resume making payments on their own.

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New guidelines, released by Fannie Mae Tuesday and scheduled to take effect November 1, will mean that unemployed homeowners cannot count jobless benefits as income when applying for mortgage modifications on loans backed by Fannie Mae.  ”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 evaluated for forbearance 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.  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 422,000 a month earlier, 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 modif
ications from their servicers. But a growing number of them, 13.4%, wind up in foreclosure.