Fannie Mae says that lenders must start helping unemployed borrowers now. In a letter to lending service providers Fannie Mae said that service providers must start working with Housing Finance Agencies (HFAs) immediately to make use of Hardest-Hit Fund Programs developed to provide temporary help to unemployed home owners.

The government has set aside $7.6 billion in an effort to help home owners avoid foreclosure and strengthen markets where housing has been particularly hard hit.

The HFAs will determine which borrows meet the requirements of the program. If the borrower is already under another Fannie Mae program to reduce or defer payments they will not be eligible unless the former program is canceled. In other words, consumers can’t double dip. This includes borrowers who are under a HAMP trial.  HAMP modifies the terms and amounts of loans so that borrowers are better able to make payments. This may include principle reduction or loan duration changes. HAMP beneficiaries begin with a probationary, trial period for a few months where they establish that they can meet the modified payments. After the trial they may be eligible to make the new loan terms permanent.

In some cases HFA’s may forestall foreclosures that are scheduled but have not been executed.

The HHF Reinstatement Program may be applied to help a borrower catch up on payments that are delinquent.

HHF programs are temporary in nature. If the beneficiary is still unemployed at the end of the program, service providers may look into other Fannie Mae options like forbearance.

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