Jobless? No loan modification then! Fannie Mae surprises everyone.

A bad news for those who have become unemployed due to recession is that they will not get mortgage modifications if their loans are Fannie Mae backed. Homeowners were using the jobless benefits to get a modification in their mortgages and they were enjoying a reduction in their monthly payments for the long term. But now, this will no longer be possible.

The reason over which Fannie Mae argues is that jobless benefits are not permanent income sources. One other possibility that opened up for the jobless homeowners is that they can now be evaluated by the lenders for a six month long forbearance plan. The positive aspect is that, at least the borrowers will not be set up for something which may fail. The step taken by Fannie Mae is nothing other than the broadening of the ban which was already in place and was implemented by the Treasury Department.

It was in July when the jobless homeowners were not allowed to apply for HAMP (Home Affordable Modification Program) using the unemployment insurance. As of now, those who will apply for HAMP will be taken through evaluation for forbearance plan. This plan will be targeted towards reduction of suspension of payments for 3 months minimum.

This new move by Fannie Mae has also created problems for the banks, which were actually making use of the unemployment insurance for their own modification programs. In case a loan from a bank in mortgage finance company backed, the banks will have to abide by the rules laid down by Fannie Mae.

Reports show that the cases of delinquencies in the mortgage market are mostly, because of unemployment and a restriction on modification of loans is place to control the sustainability issue. It is because of this ban, the Non-HAMP modifications have gained importances which have actually pushed back the government initiatives. It has, however, been found that a major portion of those enjoying alternate modification plans are actually ending up with foreclosure. This is good for prospective homebuyers who can get preoccupied homes at much lower prices, because the inventory of foreclosed homes is on the rise.

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