Bridge Loan For The Unemployed
Mortgage Bankers Association has developed a new forbearance program that would allow qualified borrowers who lose their jobs to stay in their homes while they look for a job. The MBAA proposal would have loan servicers lower mortgage payment for up to nine months while a homeowner looked for work. This would allow for a great deal of stability in the lives of those who lose their jobs and their homes simultaneously.
Most of the new home loss problems now are not sub prime or irresponsible homeowners or lenders...its the economy. The The vast majority of new distressed borrowers we are seeing involve the loss of income," said John A. Courson, MBA's President and CEO. Courson goes on to say: This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.
How It Works
Borrowers would be evaluated based on certain assumptions:
1. Borrowers will be reemployed within nine months of losing a job
2. The borrower would be a new hire at at 75% of the borrower's previous salary.
3. The borrower would be reviewed every three months regarding income and employment for a total of 9 months, the length of the program.
4. Once reemployed, the borrower would be evaluated for a loan modification under the HAMP program.
The reason for the 9 month program is based on studys showing that most unemployed are out of work for an average of 7 months. People in this position cant qualify for a loan mod, so this is sort of a bridge program to catch those who fall through the qualification cracks of existing programs.
MBAA stresses this is a voluntary program and is hoping the Treasury will create special access to funds for this program to work.
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