Following dismal results under the $75 billion dollar Making Home Affordable modification program, the Obama administration is set to announce today, a major mortgage initiative to help unemployed homeowners.
The Obama administration plans to overhaul how it is tackling the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed, senior officials said Thursday.
Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months. In some cases, administration officials said, a lender could allow a borrower to skip payments altogether.
The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment.
So far, there are reports that lenders are viewing these changes favorably. And the good news? Well, this new initiative will be financed from the existing Troubled Asset Relief Program (TARP), and would not add to the federal deficit.
