As I mentioned on Monday, Fannie Mae and Freddie Mac announced a new forbearance program that is offering relief to unemployed homeowners at risk of losing their homes. This new program applies only to loans owned by the two government-sponsored enterprises and is intended to provide some short-term relief for borrowers.
If you are considering applying for assistance through this program, you should know that other eligibility requirements include:
- You must be suffering a financial hardship due to unemployment, meaning you are not working at all (there can be an exception if a co-borrower is employed).
- You must be delinquent or on the brink of default.
- The property in question must be your primary residence.
While this program may be able to offer you the foreclosure help your family needs right now, you should always consider whether short-term solutions like these truly address your own long-term needs. The money you would otherwise pay during a forbearance period is not simply forgotten, and that means your unpaid balance will only grow larger if you are approved for participation in such a program.
For a family with financial issues that extend beyond just a period of unemployment, a Chapter 7 or Chapter 13 bankruptcy may be a better alternative to a forbearance program in terms of getting the best handle possible on your debt. On Friday, I will discuss a few of the other drawbacks associated with forbearance programs.
Law Firm of Kevin D. Judd – Washington DC bankruptcy lawyer