The Obama administration is making it easier for out-of-work homeowners to stay in their homes, as it tries to revamp its troubled foreclosure-prevention program. Starting Aug. 1, the Federal Housing Administration will extend the period for unemployed homeowners to miss mortgage payments to a full year from three or four months. That will allow thousands of qualified homeowners to go 12 months without making a payment before the foreclosure process begins.
The extended grace period only applies to FHA-backed loans, which are usually given to low- and middle-income borrowers, and represent about 14% of all active mortgages and roughly 25% of new mortgages. Last year, roughly 17,000 homeowners received a government-supported delay on their mortgage payments. About 3,500 borrowers with FHA-insured loans fall behind on their mortgages each month due to unemployment, officials said. (Read more home loans stories.)