Jobless Homeowners May Soon Get A "Time Out" From Mortgage Payments
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New mortgage policies in the works to help homeowners prevent foreclosures and possibly refinance, but fees for new mortgages are about to go up. NY1's Real Estate reporter Jill Urban filed the following report. Just when you think you understand the mortgage landscape, the rules have changed again. But this time, there are a few new policies in the works designed to support homeowners and help prevent foreclosures.
"As of March 1, Fannie Mae and Freddie Mac are implementing a new strategy around loan forbearance. 'Loan forbearance' is like a time out, so, if you lose your job, you can have your mortgage payments suspended or 'time out' for up to a year’s time," says President Ross Weinstein of the New Deal Mortgage Group.
Given the high unemployment rate in New York, this could make a huge difference for people who are at risk of losing their homes.
Previously, some banks offered forbearance programs but they were difficult to get. Now this will require all lenders to offer this as an attainable option.
"There are some criteria to meet. Your ratios must be above 31 percent, you have to have depleted most of your assets. If you spouse is working currently, you may qualify for a partial forbearance and it only applies to primary residence properties," says Weinstein.
Loan forbearance, Weinstein stresses, is not a pass on payments. Once the time is up, the money will need to be paid back.
Also in an effort to stop foreclosures, another proposal is on the table to help many refinance.
"New proposed legislation is looking to allow folks that have a private mortgage, a loan not backed by or owned by Fannie Mae or Freddie Mac, to be able to refinance, even if they are underwater, into a [Federal Housing Administration]-type loan," says Weinstein.
Unfortunately, those who are in the market now for a mortgage are not facing good news. While rates are hovering around their all-time lows, fees are about to go up.
"Fannie Mae and Freddie Mac are increasing their guaranteed fees as a direct result of an administration requirement which is helping to foot the bill for the payroll tax cut which was implemented in December," says Weinstein.
The rules for mortgages are certainly going to change again, and NY1's Real Estate report will keep people in the loop when they do.