Mortgage Help when Unemployed

Mortgage help when unemployed
Mortgage help when unemployed
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 )

4 Responses to Mortgage Help when Unemployed

  1. I’m glad I don’t have a need for this program, but glad it’s there for those that do.

  2. I just hope it helps at least a few people. It’s certainly worth looking into. The most important part is that it could get you working with the right people, the ones who might be able to help even if the UP program doesn’t cover your mortgage.

  3. Kevin, what I am hearing out there in the streets is that some of these programs do not help an unemployed person to keep their homes. Now as always, we have to be careful about any program that claims to want to help us in life. What I do suggest to the person that just lost their job or know they are going to – downsize immediately. I know when I got laid off 3 times in my lifetime, I knew it was coming and used the time to make some adjustments rather than stress out and worry about what I had no control over. This activity helped me feel I was doing something and worked in my favor. I was able to notify my landlord that I would have to “maybe” move and would keep them abreast. I did end up having to give up the house I was renting, but it was a whole lot easier on my credit report because I notified them as soon as I knew I was on the layoff list. Bottom line, the homeless shelters are full and not someplace you want to take your family – so I would rather downsize maybe to an apartment or rent a room versus ending up on the streets. I keep hoping that the White House will get more involved with find jobs for those of us who get laid off so that we are not another number added to the growing list of the jobless. Unemployment benefits if they exist do not supply enough to live a simple life and in my case I had to supplement with my savings. In ending, what a lot of people have done is rent out their house rather than lose it while they figure out what to do. Explore your options before giving up on a roof over your head = you will find the one that works for you 🙂

  4. Hi Angela – Unfortunately I have to agree. Mortgage programs to save the home are generally not workable for people with little or no income. They’re mostly for people who have fallen behind on their payments and need to readjust the loans (add non-payments to the loan balance) as a kind of a do-over reset. That can actually make a person’s situation worse in the long run because you end up owing more.

    I also agree completely that you need to downsize your living arrangement when income disturbance becomes obvious. Most people wait and hope against hope for a miracle recovery that never comes. Best to roll with the punches and be ready to make changes as they become necessary.

    You write and speak as one who has been there, which is why you have such insight.

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