Sen. Elizabeth Warren (D-Mass.) applauded a recent decision by the Federal Housing Administration to allow more people to qualify for loan modifications, a move advocated by both Warren and Senate Banking Committee Chairman Tim Johnson.
“This policy change will reverse the discrimination against seniors, veterans, and single mothers in the FHA’s loan modification program and give them a better chance to save their homes,” Warren said. “I applaud Commissioner Galante and the FHA for making this change, which is good for families and will help make the FHA’s loss mitigation program more effective.”
In a notice issued last week, the FHA announced the changes, which include updated guidance on “continuous income” other than wages used in loss mitigation evaluations. Under the former policy, borrowers had to be employed to be eligible for a loan modification, but the new policy will allow income not related to employment, such as disability or Social Security benefits, to count toward eligibility for an FHA loan modification.
“There is no good justification for restricting access to the loan modification program based on the source of one’s income, and there is certainly no justification for doing so in a manner that systematically hurts our seniors, veterans and single mothers,” Warren and Johnson said in a letter to the FHA earlier this month. “The ‘currently employed’ provision is bad for homeowners and also bad for FHA, which benefit from a more effective loss mitigation program.”