NEW YORK (MainStreet) — While Washington debates spending cuts, the federal government is stepping up efforts to keep jobless Americans in their homes.

New rules released this week by the Department of Housing and Urban Development give unemployed Americans a big extension on forbearance payments. The extension – nine months’ worth – may be enough time for Americans to save their homes. At least that’s what Uncle Sam hopes.

On July 7, HUD officially extended the Federal Housing Administration’s (FHA) Home Affordable Unemployment Program from three to 12 months. The federal government expects mortgage servicers to fully participate in the extension program, with HUD announcing a “new standard” for mortgage servicers to follow in administering loan forbearance programs.

Forbearance essentially allows homeowners to temporarily stop paying their mortgages when they’re dealing with difficult financial circumstances, such as a job loss or serious health issue.

And it is HUD’s position that mortgage lenders are too slow in granting unemployed homeowners a break on their mortgage payments. The nine-month extension will buy such homeowners much-needed time to get back on their feet financially, and keep their homes from falling into foreclosure.

"The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers," says U.S. Housing and Urban Development Secretary Shaun Donovan. "Today, 60% of the unemployed have been out of work for more than three months and 45% have been out of work for more than six. Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home."

Any FHA-approved mortgage servicer must participate in the forbearance program, and must remove any “upfront hurdles” to getting approved, HUD says. And at the end of the 12-month period those mortgage servicers must work with homeowners to examine “any available options” to keep that homeowner in his or her house.

If a mortgage servicer decides that the homeowner can’t meet his or her mortgage obligations and begins the process of foreclosing on the home, HUD is mandating that the homeowner gets seven days to provide additional data that could help him or her avoid the foreclosure.

HUD says that 60% of jobless Americans have been out of work for more than three months, the minimum forbearance period in FHA’s current program. In addition, 45% of the unemployed have been out of work for more than six months.

“Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home,” HUD says in its statement.

The HUD deal is a good one for unemployed homeowners. Here’s hoping that 12 months will be all that they need.

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