The Mortgage Bankers Association (MBA) is working on a proposal to help unemployed borrowers, Josh Denney, the MBA's associate vice president of public policy and government affairs said yesterday. Speaking at the MBA’s servicing conference, currently going on in San Diego, Denney noted that some 14.8m unemployed Americans, combined with MBA’s findings of 5m loans either 90+ days delinquent or in foreclosure. This factor necessitates a move to “weave a forbearance plan into HAMP,” he said. MBA president and CEO John Courson, in a letter to Treasury secretary Tim Geithner dated Feb. 18, proposed such a plan. “There is no doubt that unemployment is a serious challenge for many Americans right now, many of whom are mortgage borrowers,” Courson said. “However, unemployment is usually a temporary condition where the worker is actively searching for a job and willing to work. This is why MBA proposes a forbearance program for unemployed owner-occupant borrowers, whether they are current or delinquent, who have involuntarily lost their employment.” The program would give incentives to investors and servicers (through Treasury’s TARP) that place unemployed borrowers in a forbearance plan for up to 90 days — a period that can be renewed twice based on borrower’s financial circumstances. This plan would put a borrower in forbearance for up to nine months, at which time (or earlier, at re-employment status) eligibility for a HAMP trial can be determined. The forbearance is based on the borrower’s ability to make payments at 31% of household income. But if 31% borrower’s household income falls below a $300 threshold, servicers can postpone mortgage payments until the second forbearance phase. Write to Diana Golobay.