If you’re unemployed and struggling to make your monthly mortgage payments, there may be help available. The federal government has a mortgage assistance program designed to provide mortgage help when unemployed, called the Home Affordable Unemployment Program, or UP for short.

The program can either reduce your monthly payments or even suspend them for a time to help you get back on your feet.

For many people, unemployment is a temporary situation, but getting some sort of help with their house payment during the period of difficulty could avoid foreclosures by improving home affordability during a time of struggle.

The benefits of the UP program

For mortgage help when unemployed, the UP program can help you in one of two ways:

1. It can lower your monthly mortgage payments to 31% of your monthly income. This includes your monthly unemployment benefit income, so if that’s all you have, your mortgage payment will be limited to 31% of that benefit.
2. Suspend your monthly mortgage payments for up to 12 months.

Once you reach the end of your participation in the UP program, you will be evaluated to determine if you are eligible to participate in a Home Affordable Modification Program (HAMP). That would allow you to do a mortgage modification that may result in a longer term mortgage relief program. That will allow you to improve your home affordability on a permanent basis.

When you contact the agency to get information you will be connected with a HUD approved housing counselor who will guide you through the process. The program is available at no cost to you.

At present, the program is scheduled to end on December 31, 2013. But as the case with many government programs, there’s a strong likelihood that it may be extended, particularly if the economy takes another downturn.

Program eligibility

According to program guidelines, you may be eligible if:

• “You are unemployed and eligible for unemployment benefits.
• You occupy the house as your primary residence.
• You have not previously received a HAMP (Home Affordable Modification Program) modification.
• You obtained your mortgage on or before January 1, 2009.
• You owe up to $729,750 on your home.
• More than 100 HAMP-participating servicers can offer UP to eligible unemployed homeowners.
• You may be required to make a partial payment, not to exceed 31 percent of your verified monthly gross (pre-tax) income including unemployment benefits.”

One problem I DO see in the eligibility requirements is that you must be eligible for unemployment benefits; that would seem to preclude people who are unemployed due to the loss of their business, and perhaps even those who’s unemployment benefits have been exhausted.

The program doesn’t cover all mortgage programs

Curiously, the UP program does not cover mortgages held by either Fannie Mae or Freddie Mac, which are by far the largest holders of US mortgages. This is perhaps because both mortgage servicers have “their own forbearance arrangements for unemployed homeowners.” If your mortgage is held by either of the two mortgage giants, you’d have to contact them directly to inquire about your eligibility in their versions of mortgage help when unemployed.

If your mortgage isn’t held by either Fannie Mae or Freddie Mac, check out the Home Affordable Unemployment Program website to see where you can get started.

The program itself probably won’t help most homeowners who are dealing with unemployment, but it could be the starting point to begin searching out options. It’s good to know that there are some sort of programs available for people under financial stress, and at worst all this will cost you is some time making phone calls.

Who ever you speak to at the UP program, be certain to inquire if there are other options available to you in the event that your mortgage isn’t eligible under this program. The counselor you speak with may be able to put you in touch with the people you need to speak with at Fannie Mae, Freddie Mac, or any other agencies who may be able to help you out.

This program wasn’t available when I was in the mortgage business, nor do I know anyone now who has participated in it. But as the saying goes, “nothing ventured, nothing gained”; this program is certainly worth the venture. Good luck!

Have you found any other programs or agencies that can offer homeownership help when unemployed?

( Photo from Flickr by srqpix )