* U.S. says tens of thousands of homeowners could benefit
* Minimum forbearance period extended to 12 months
* White House actions may help housing market recovery
By Rachelle Younglai
WASHINGTON, July 7 The Obama administration on
Thursday unveiled plans to give unemployed borrowers and their
bankers more time to delay home foreclosures, the latest
effort to help struggling Americans stay in their homes.
With 13.9 million Americans out of work and a glut of
foreclosures depressing home prices and the overall market,
the administration has been forced to tweak some of its
foreclosure prevention plans.
Under special programs run by the Federal Housing
Administration and the Treasury Department, lenders would be
required to forbear or postpone loan payments for qualified
homeowners by at least one year. The previous forbearance
period was four months for the Federal Housing
Administration's program. The Treasury's unemployment program
had a minimum forbearance period of three months.
"The biggest driver of foreclosures today remains
unemployment," said Shaun Donovan, the secretary for the
Department of Housing and Urban Development.
The extensions "will provide more opportunities for
unemployed borrowers to stay in their homes while they look
for a job," he said.
Donovan said tens of thousands of homeowners could benefit
from the longer forbearance period.
Consumer advocates welcomed the administration's plan and
said it was a long time coming.
"It's a significant improvement. However, many people may
have lost their homes because of the delay in extending it,"
said Alys Cohen, a staff attorney for consumer advocacy group
the National Consumer Law Center.
MORE TIME TO FIND WORK
The government's latest labor report showed that more than
45 percent of unemployed Americans have been out of work for
more than six months.
The administration is hoping that its actions will help
set the standard and push mortgage servicers to provide more
assistance to struggling borrowers. Most of the major
servicers, which collect payments and negotiate new terms for
troubled loans, take part in Treasury's housing programs.
The administration has thrown billions of dollars in
taxpayer funds into programs to prevent foreclosures.
One plan gives banks incentives to permanently modify home
loans. Another gives states that have been the hardest hit by
falling home prices funding to help reduce the principal of a
But nothing has helped the housing market recover after
its collapse starting early in 2007.
Although the drop in U.S. home prices showed signs of
easing in April, foreclosures and weak prices remain a major
overhang for the market with too many homes up for sale and
anemic consumer demand.
More than 3.5 million homes have been foreclosed on since
early 2007, according to real estate data firm RealtyTrac.
"If we can take some of the inventory out, you will help
the housing market see its natural recovery sooner," said
Sarah Wartell, executive vice president with a progressive
think tank, the Center for American Progress.
"In this case, we have got a bunch of foreclosures that
may be able to avoided if we give people more time to find a
new job in this very difficult economy," she said.
(Additional reporting by Leah Schnurr in New York; Editing by