The Obama administration on Thursday unveiled an initiative aimed at helping unemployed homeowners remain in their homes while they seek work and try to stave off foreclosure.
Under the measure, banks and mortgage servicers would be required to allow eligible homeowners to defer all or part of their mortgage payments for a year or more, far longer than the several months currently mandated by some existing government programs.
“The biggest driver of foreclosures today remains unemployment,” said Housing and Urban Development Secretary Shaun Donovan, who added that he expects the initiative to reach “tens of thousands of families” and to set a standard that the financial industry will follow. The expanded timeframe is necessary, Donovan said, and simply reflects “how long it takes unemployed borrowers to find a job.”
The announcement came a day after President Obama acknowledged at a town hall forum that his administration so far has failed to provide adequate help to troubled homeowners, given the scope and severity of the nation’s housing crisis.
“The continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected,” the president said at the event, later adding that his administration’s efforts to help struggling homeowners were “not enough.”
“We’re going back to the drawing board,” he said. But he also noted that “given the size of the housing market, no federal program is going to be able to solve the housing problem.”
The new undertaking announced Thursday applies to out-of-work homeowners whose mortgages are backed by the Federal Housing Administration, as well as some unemployed borrowers who qualify for the Treasury Department’s main foreclosure-prevention program, Home Affordable Modification Program, or HAMP.
Consumer groups largely applauded the new effort, saying it would buy struggling homeowners precious time to get back on their feet.
“This is really a big step forward,” said Lew Finfer, a member of the PICO National Network, a coalition of faith-based community organizers that has pushed for more foreclosure-prevention help. “It’s a long time coming.”