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Unemployed FHA borrowers to get year of forbearance

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Loan servicers collecting payments on FHA-backed loans will be required to allow qualified borrowers who lose their jobs to miss up to 12 months of mortgage payments before initiating foreclosure proceedings against them, the Obama administration announced today.

The FHA's current three to four months of required unemployment forbearance is "inadequate for the majority of unemployed borrowers," Housing Secretary Shaun Donovan said in announcing the change.

"Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six," Donovan said. "Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home."

Although not all borrowers will qualify for the special forbearance program, the administration said it's removing upfront hurdles to qualificatio...