To prevent losing your homes, the Biden administration has announced new housing assistance measures for homeowners with loans affiliated with the government.
The Department of Housing and Urban Development (HUD), Department of Agriculture, and the U.S. Veterans Affairs have collaborated to reduce monthly payments for homeowners who are struggling financially so they can stay in their homes on a long-term basis without losing equity or building up debt.
Here’s what they are talking about:
The new HUD guidelines, which apply to all homeowners with FHA loans, require borrowers impacted by COVID-19 to be offered a no-cost option for resuming mortgage payments. A 25% reduction to their P&I payment shall be given to FHA borrowers who cannot resume their monthly payments – eligible for as part of a loan modification. This relief will be offered via two specific programs:
- COVID-19 Recovery Modification: If you cannot resume monthly mortgage payments, you can extend the mortgage term to 360 months at current market rates, with an aim to reduce the monthly P&I portion of your mortgage payment by 25%.
- COVID-19 Recovery Standalone Partial Claim: FHA borrowers who can resume their monthly payments have the option to continue these payments and cover their missed payments with a zero-interest, secondary loan. This loan is repaid when you sell the home or refinance your mortgage.
USDA COVID-19 Special Relief Measure: Eligible USDA loan borrowers can access a combination of:
- Up to 20% reduced P&I payments
- Interest rate reduction
- Term extension
- Mortgage recovery advance to help cover past-due mortgage payment
Veterans Affairs (VA) COVID-19 Refund Modification: Assists eligible VA borrowers to access a 20% or more reduction in monthly P&I payments.
The above options for homeowners with FHA, USDA, and VA loans are new and designed to supplement the following protections already in place:
- Foreclosure moratorium extension: through July 31, 2021
- Forbearance enrollment extension: through Sept. 30, 2021
- COVID-19 Advance Loan Modification
- Federal Housing Finance Agency (FHFA) existing COVID loss mitigation options.
Homeowner Assistance Fund (HAF): President Biden’s American Rescue Plan provides $9.961 billion toward homeowners whose finances were negatively impacted by COVID-19. These funds will be integrated into the payment reduction options and can be used for mortgage payments assistance, homeowner’s insurance, or utility payments.
Extended Term Option: The Government National Mortgage Association (Ginnie Mae) is working on a security product that allows government agencies, such as the FHA and HUD, to extend mortgage terms to up to 40 years. This option, combined with the monthly payment reduction program, may be suitable for borrowers who are behind on their mortgages and can benefit from the monthly payment reduction associated with this option. The downside is the extended term product is not expected to be available until later this year.
Relief Opportunities for Borrowers Not Currently In Forbearance
HUD, VA, and USDA will continue to allow homeowners to start COVID-related forbearance applications through Sept. 30, 2021.
Fannie Mae or Freddie Mac mortgages will continue to be eligible for COVID-related forbearance.
The Consumer Finance Protection Bureau (CFPB) offers more information on relief options, protections, and important deadlines on its website.
The number of households in forbearance has decreased by 50% from the pandemic peak, the Biden administration said. Still, nearly 1.75 million Americans remain in forbearance. So, clearly, many Americans still need deeper assistance.
The Biden Administration Just Announced New Measures to Prevent Foreclosures. Here’s How to Use Them | Next Advisor – In Partnership with TIME
So, if you find yourself still struggling to make mortgage payments and not sure if you qualify, why not think outside of the box? Instead of asking your loan providers for help, just sell your house! It’s never too late to make big decisions now.
The best option you are looking for is right in front of you.
Reach me at Cell 971-400-6420 or Jennifer.Davis@exprealty.com