The U.S. Treasury Department on Tuesday issued Supplemental Directive 10-04, which formally introduced the previously announced Home Affordable Unemployment Program (UP). The program offers eligible borrowers a forbearance plan to temporarily reduce or suspend their mortgage payments, and it takes effect July 1.
Under UP, unemployed borrowers must meet the Home Affordable Modification Program (HAMP) eligibility criteria, as well as be unemployed when a request for assistance is made; be entitled to receive unemployment benefits in the month of the forbearance plan effective date (servicers have discretion to require a borrower to have received unemployment benefits for up to three months before commencement of the forbearance plan); and request an UP forbearance plan before they become seriously delinquent (i.e., miss three monthly mortgage payments).
Unemployed borrowers who request assistance for HAMP must first be evaluated for an UP forbearance plan. If they qualify, they must be offered an UP forbearance plan before they can be considered for HAMP, according to the directive.
Borrowers currently in a HAMP trial-period plan who become unemployed may receive an UP forbearance plan if they have missed fewer than three monthly payments as of the first payment due date of the HAMP trial-period plan. If they do qualify, their existing HAMP trial-period plan must be canceled and the UP forbearance plan must immediately begin, without waiting until the borrower has received three months of unemployment benefits.