Long-term Unemployment Up Adds Home Mortgage Loan Risks

According to a joint report of the Office of the Comptroller of the Currency and the Office of Thrift Supervision, 51.5% borrowers who received U.S. delinquent loan modification mortgage default in this month again. At the same time, the increase of long-term unemployment adds to the foreclosure worries.

According to the Associated Press, the number of people who had been out of work six months or longer reached 6.7 million in April 2010. That was an all-time high. These people made up 45.9 percent of all unemployed people, also a record high. With increasing long-term unemployment, more and more homeowners now fall into the exhaustion of saving and have a difficult time making their residential mortgage payment. Many of them have to face foreclosure risks now.

House Mortgage Rate Modification Application for Unemployed Homeowners

The long-term unemployed homeowners will have a new option to avoid or delay foreclosure. The Obama Administration has created a new home equity loan modification scheme called Unemployment Forbearance Plan through their Making Home Affordable Program. The scheme will launch in this fall.

Around 4.5 million foreclosures applications will be expected in 2010, according to Irvine, California-based RealtyTrac Inc. The Obama Administration launched in February 2009 the Home Affordable Modification Program to provide eligible homeowners the opportunity to modify their mortgage rate to make them more affordable. According to the makinghomeaffordable.gov, more than one million homeowners have got help under the program, which will help 3 to 4 million homeowners by 2012.

In order to be eligible for a mortgage rate modification, a homeowner should meet certain criteria. The home must be the homeowner’s primary residence. The current mortgage must have been got before January 2009. The mortgage payment (including principal, interest, taxes, insurance and homeowner’s association dues) must be greater than 31% of the homeowner’s gross income. The forthcoming Unemployment Forbearance Plan may provide other eligibility requirements for a residential mortgage modification.

Can the Unemployment Forbearance Plan Stop Foreclosure?

The forthcoming Unemployment Forbearance Plan can not consequentially help unemployed homeowners stop foreclosure. But it gives a homeowner who may soon get a job a few months without the strain of making a house mortgage payment, or offers someone whose foreclosure is inevitable more time to make living arrangement. A homeowner can contact his house mortgage lender or a home loan counselor for to find his best modification option. Commercial mortgage web sites that provide services of purchasing and refinancing home loans and home equity consolidation could help homeowners make better mortgage payment arrangement too.