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Proposed program could benefit unemployed homeowners

February 25, 2010 - The Mortgage Bankers Association (MBA) has presented a plan for a forbearance program that may help jobless homeowners keep up with their mortgage payments, CNN reports.

If it is approved, the program would enable loan providers to offer temporary payment reductions to borrowers who have become unemployed. These forbearances would ensure that homeowners' monthly mortgage bills do not exceed 31 percent of household income for a period of nine months.

While many homeowners have obtained loan modifications that permanently decrease their payment amounts, the MBA program would add the accrued savings to the total amount owed to the lender. However, participants would be placed under consideration for a long-term loan modification once they find employment.

John Courson, the organization's chief executive, said the program is intended to offer "ways to allow [unemployed] borrowers to keep their homes while they look for another job" because these individuals typically do not qualify for modifications on their own.

This week, the average mortgage rates rose above 5 percent for the first time in three weeks, Reuters reports.

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