“As the causes of the problems in the housing market have evolved, it is only right that we should find new workable solutions to help troubled borrowers.   As the industry worked its way through the problem of subprime borrowers who could no longer afford the mortgage they had taken, it became apparent that the emerging challenges lay with borrowers who had lost their jobs or seen a significant drop in household income.

“Last fall, MBA brought together a task force of its members to look at ways to help those borrowers.  In February, we presented a proposal to the administration that would enable loan servicers to offer forbearance as part of HAMP, reducing payments to an affordable level for up to nine months for those borrowers who had suffered a reduction in household income.  We are pleased to see that the administration’s plan incorporates some of the components of that proposal.

“Expanding refinance opportunities for FHA borrowers and creating a HAMP component encouraging the reduction of mortgage principal, gives servicers yet more tools they can use to help underwater borrowers.  As it relates to the program to offer incentives for principal write downs, each servicer will need to determine whether this is the best approach to help the individual borrower, keeping in mind any contractual restrictions or requirements from the mortgage investor.” 

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.