Bank of America (BAC: 18.39 0.00%) is considering a special program for unemployed borrowers that would offer as many as nine months of no mortgage payments while they hunt for a new job.
A spokesperson for BofA told HousingWire that the program is still pending regulatory approval. Whether or not the payments are forgiven or just deferred has not been solidified yet, but according to the spokesperson, a likely option would be to capitalize the past due payments into the new permanent modification.
If the borrower finds employment during the nine-month period, BofA would structure a loan modification using its own programs or the Home Affordable Modification Program (HAMP).
BofA completed almost 32,900 HAMP permanent modifications through March, up from 20,666 in February. BofA was the first to commit to the HAMP second-lien program from the Treasury and the first to offer principal write-downs as part of the servicing process.
If the borrower cannot find a job after nine months, the borrower would enter into a previously agreed upon deed-in-lieu of foreclosure arrangement. BofA would offer a minimum $2,000 “cash-for-keys” check to the homeowner.
“Sustained recessionary impacts and their effect on the unemployed, in particular, demand we consider creative solutions above and beyond what is currently available to put these customers in the best possible position to sustain homeownership,” the BofA spokesperson told HousingWire.
The savings bank Flagstar put in a new unemployment insurance programearlier in the month that would cover mortgage payments if the borrower lost his or her job. Genworth Financial (GNW: 18.34 0.00%) is providing insurance to the program that comes at no charge to the borrower.
This month, 15m people held no job, and the overall unemployment rate stayed at 9.7% in March – the same as February, according to the US Department of Labor