On February 27, 2012, an article in Forbes proclaimed that the quarter of a million jobs expected to be added over the next four years placed Washington DC atop the magazine’s list of the Best Cities for Jobs. With Maryland having an unemployment rate that is nearly two points lower than the national average, you could be forgiven for thinking that the figures indicate that a housing recovery is progressing.
Yet, the truth is that the unemployment figures can often be misleading. In addition to the number of people who have stopped looking for work and are no longer included in the statistics, there are many more people across the country who are underemployed, working part-time positions when they would prefer full-time.
Whether homeowners are struggling to find work or to find additional income to help pay their bills, there are still many families who are in dire need of foreclosure help. Fortunately for the unemployed homeowners with loans owned by Freddie Mac or Fannie Mae, or about half of all mortgages, there is an unemployment forbearance program that went into effect in February that seeks to help those suffering from lack of work. Under the new program, unemployed borrowers may be allowed to defer all or a portion of their monthly mortgage payment for up to 12 months, and any foreclosure proceedings are suspended during the forbearance period.
As usual, this program could provide help to many households but could just as easily provide headaches for many more. This week, I will further examine some of the details of the forbearance program and discuss whether participating in it makes more sense than filing Chapter 7 or Chapter 13 bankruptcy.