Source: CNN Money

The unemployed may get some help paying their mortgages from the Mortgage Bankers Association under a recently proposed forbearance program.

Under the proposal, loan servicers would reduce eligible borrowers’ monthly payments to no more than 31% of their household income for up to nine months. Unlike a modification, however, the arrears would be tacked onto the end of the mortgage.

As part of the proposal, the association has asked the Treasury Department to provide loans to some servicers to cover payments to the mortgages’ investors. Treasury officials, who met with the group last week, have not made yet a determination, a spokeswoman said.

The trade group’s goal is to address the growing number of people who are falling behind on their mortgages because they’ve lost their jobs.

“Borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job,” said John Courson, the association’s chief executive.

Once borrowers find new employment, they will be considered for a long-term modification under the Obama administration’s foreclosure prevention program.

Most consumer advocates, however, do not think forbearance plans are an answer to the foreclosure crisis. Most delinquent borrowers need more help than just a temporary reduction of their payments.

Help for business? It’s not just residential homeowners who are struggling. Reports show that commercial loan default numbers are on the rise as more business feel the heat from the unemployment spike over the last two years. Many say that Quick business loans are the key to helping companies stay afloat, pay their commercial building loans, while homeowners and the unemployed get help from the other side. Both small business loans, and mortgage workout plans are needed, many suggest, to serve the economy organically so that buyers have money to purchase the goods and services being provided by the small business owner.

Also, it’s unlikely that borrowers will find new jobs in nine months in this tough economy, said Kathleen Engel, a law professor at Suffolk University in Boston who specializes in foreclosures. She said the program would need to last at least two to three years to be effective.

The association unveiled its proposal the same day that Federal Reserve Chairman Ben Bernanke told Congress that he’s concerned about the weak state of the job market. And the White House’s top economic adviser has said she expects unemployment to remain around 10% for the rest of this year and remain high in coming years.

Engel suggests the government provide loans directly to the distressed borrowers to help them meet their obligations while unemployed.

“So far, we haven’t seen a lot of help going to the borrowers,” she said.

The Obama administration last week announced a $1.5 billion initiative to help borrowers who are unemployed or owe more than their homes are worth. The program funnels the funds to five state housing finance agencies and charges them with coming up with programs to help these homeowners.

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My Take: You’d have to be living in a cave not to feel the impact from the current economic slowdown across America. Every time you hear the sound of a credit card processing machine it’s difficult not to think about the enormous amount of debt folks are racking up on their credit cards as they try to eek out a living on unemployment and ride out the crisis. Many unemployed workers are reportedly not even paying their mortgages before credit card bills, because they figure they’ll need their credit if and when they are foreclosed upon, and, on the up-side, they might just get some help from the government on their mortgage anyway, so keep the banks happy in the meantime.

I agree that the small business sector is also being pounded by the economy . Let’s face it: If workers can’t afford to pay their mortgages, how can they buy anything extra, whether it’s imprinted shirts for their kids’ baseball teams, dinners out on weekends, or family vacations to national parks. This belt tightening trickles all the way down to business, and even the most successful companies out there are having to forego perks for employees, buying and sending corporate gifts to clients, and upgrades on technology and infrastructure.

The key, as Obama and others have been saying, is to create more jobs. Once we get more people back to work and making money, we’ll start to see spending habits shift and the much-needed infusion of money into the small business sector will begin to flow.

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A note is a written document that is a promise to pay or a promissory note. The terms of the note include the amount, interest rate and length of time a person has to pay it off. A real estate note is a mortgage on a piece of property or house.

Anybody can sell a note. Most people do not want to wait 30 years to get their money. That is where a broker comes in. They sell real estate notes. They also have investors who are interested in purchasing your note or your clients note. This alleviates the worry about late payments or nonpayment.

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