FHA introduced a program last week allowing for up to twelve months of deferred house payments for those out of a job. It is called the FHA Foreclosure Freeze. It is for FHA LOANS ONLY. The borrower MUST BE UNEMPLOYED. NO debt is forgiven. It is a forbearance...i.e. The lender will allow you to live in the house without making payments for 3-12 months. When that grace period ends, you MUST RESUME making your payments and the missed payments will be tacked on to the back end of the loan so you will be paying for a longer period.
Please keep in mind that this is a VOLUNTEER PROGRAM for lender participation. Your lender may choose to not participate. The FHA is limiting the number of borrowers taking advantage of this program to 3,500 per month. That is a small number relative to the amount of FHA homeowners going into foreclosure across the country.
This FHA Foreclosure Freeze program may "help" a select few, but it will not have an impact on our current housing market. Those applying for this plan may be hurt by waiting for the lender's response and not acting on other viable solutions, i.e. short sale, loan modification, etc. This plan may actually increase a homeowner's debt on the loan if his/her lender chooses to penalize the homeowner for all the late payments.
It makes me angry to think of all the government money wasted on the manpower it took to create this weak program. We need an actual fix to help the housing market. This will not happen until politicians get out the lenders' back pockets and think independently. The politicians need to think more about the individual homeowner than about creating tax incentives and bonuses for the lenders.
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