The Obama administration announced plans Thursday to give unemployed homeowners struggling to make mortgage payments more time to avoid foreclosure.

Unemployed borrowers may now be eligible to receive a minimum of 12 months of forbearance, up from the previous minimum of 4 months for all loans insured by the Federal Housing Administration (FHA).

Servicers participating under the Treasury Department's Home Affordable Modification Program (HAMP) will also be required to extend the forbearance period up to a year whenever possible under the new rules.

"The biggest driver of foreclosures today remains unemployment," Shaun Donovan, Secretary of Housing and Urban Development, told reporters on a conference call. "These changes are needed because the current unemployment forbearance programs have mandatory periods that aren't in line with how long it takes the majority of borrowers to find a job."

About 60% of those unemployed have been looking for work for more than three months, while 45% have been out of work for more than six months — falling short of the current minimum forbearance period.

"These adjustments will provide more opportunities for borrowers to stay in their homes while they look for a job," Donovan said.

The administration anticipates the measure will help tens of thousands of families struggling to make payments to keep their homes, but has yet to be precise on exactly how many homeowners it could reach. More information is due out soon, Donovan said.

The maximum amount of time that a borrower can stay in forbearance will largely depend on how big of a payment the homeowner will be able to make. For example, if a borrower made half of their monthly mortgage payment they could potentially receive forbearance for up to 24 calendar months, Donovan said.

To qualify, homeowners will not be required to be receive unemployment insurance, but would be determined based on if a borrower would be able to catch up to a payment schedule under an agreed upon timeframe.

There are about 3,500 families with FHA-backed loans that slip into 90-day delinquency a month as a result of unemployment, Donovan said. But he warned not all will qualify.

'Not all of those this will be the best option for," Donovan said. "Many of them may receive a different form of modification or another tool, but that is sort of the eligible universe that we see out there."

Servicers will be required to consider each loan close to a serious delinquency for an extension, but would ultimately provide the homeowner with the best possible option for the situation.

The new initiative comes in addition to some 30,000 new HAMP modifications undertaken each month, as well as the homeowners considered for unemployment forbearance separate from modifications, HUD said.

The administration is hopeful that the private market will follow suit despite not being able to explicitly direct them to do.

"By setting a standard, we hope that it will also push the mortgage industry to extend more robust assistance to unemployed homeowners in the economic downturn in other parts of the market as well," said Donovan.

For those that do find jobs and are able to make regular payments, they will be responsible for making up the forbearance. However, in the case of re-employment at a lower salary, borrowers might be able to receive a partial write-down on the loan.

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