The Obama administration said Thursday it would require lenders to allow unemployed homeowners to delay their monthly payments for up to a year without threat of foreclosure.
The announcement came a day after the president made a rare admission of a policy misstep, acknowledging that his policies have failed to provide enough support to struggling homeowners and recognize the scope of the nation’s housing crisis.
The Federal Housing Administration previously required banks to allow FHA borrowers to put off their mortgage payments for a minimum of four months while lenders worked out options to keep people in their homes. The expansion of this program is needed because of “how long it takes unemployed borrowers to find a job,” said Housing and Urban Development Secretary Shaun Donovan, who added he expects the new initiative to reach “tens of thousands of families.”
The Treasury is also asking lenders to offer a similar deal to borrowers under its primary foreclosure prevention program, but it does not have the authority to require the change, administration officials said.