Published December 22, 2010
President Obama signed a law extending unemployment benefits for another 13 months when he signed a larger tax-cut bill on December 17, 2010. However, those who have already collected 99 months worth of benefits will not be collecting additional money.
Unemployment benefits: How the system works
Here's how the system works: Unemployment pay comes in five consecutive tiers, and each one offers a set number of weeks of benefits, depending on the unemployment situation in a given state. If Congress and the president had not agreed to extend qualifying dates, workers would not have been able to move to the next higher tier. Thanks to this new legislative compromise, about 7 million Americans will still be able to move into the next tier of benefits, allowing some to be eligible for up to 99 weeks of benefits. Only workers in states where unemployment rates are high enough can they qualify for up to 99 weeks worth of benefits; currently, 25 states meet this threshold. The tiers are as follows:
1. Regular benefits: 26 weeks
2. First tier: 20 additional weeks
3. Second tier: 14 additional weeks
4. Third tier: 13 additional weeks
5. Fourth tier: 6 additional weeks
6. Fifth tier: 20 additional weeks (total 99 weeks)
Unemployment benefits extension: Who gets what?
The expiration of extended unemployment benefits on November 30, 2010 meant unemployed Americans got checks only until the end of whatever tier of unemployment they were in. The recent unemployment extension grants additional benefits for those who had not yet exhausted their full 99 weeks. There is no extension, however, for those who have collected benefits for a full 99 weeks--about 4 million Americans, and an additional 4 million will lose benefits in early 2011. If you have not yet exhausted your benefits, it is absolutely critical that you act to save your home before it's too late.
Mortgage modification plan for the unemployed
The Home Affordable Unemployment Program (UP) was added to the Making Home Affordable arsenal in May, and as of August 1, unemployment benefits will only be considered for UP and not for HAMP mortgage modification applications. UP is a forbearance plan for qualified borrowers which temporarily reduces (to no more than 31 percent of their gross income) or eliminates their mortgage payments for a period of time.
If you are facing the prospect of losing your unemployment benefits and have a mortgage, you have no time to waste. It is absolutely crucial that you understand that once you are more than three months late on your mortgage, you are too late to qualify for this program. By acting now you might be able to save your home. With the UP, mortgage servicers must offer a forbearance plan to borrowers who meet the following criteria:
To get forbearance, your timing is critical. You must (usually--check with your lender) have received three months of benefits, but not be more than three months behind on your mortgage. And your benefits cannot have run out by the time you begin your forbearance period.
What about HAMP?
If you are eligible for UP, the servicer is not required to offer you a modification under HAMP as long as you are eligible for the UP forbearance plan. You may request reconsideration under HAMP at a future time if you meet the requirements for continuing eligibility.