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Across America, a strong economic recovery is taking hold. Since
Shortly after taking office, the
This helped ensure that American families did not lose their homes during the pandemic. Those policies prevented foreclosures and allowed some homeowners with government-backed loans to pause their mortgage payments for up to eighteen months. Nearly 7.2 million American households took advantage of forbearance options.
Thanks in part to
Offering Borrowers Loan Modifications and Payment Reductions that Will Help Them Stay in
With over 160 million Americans fully vaccinated and every American offered the opportunity to get vaccinated, along with an improving economy and more Americans getting back to work, many homeowners exiting mortgage forbearance are returning to their pre-pandemic earnings and are no longer facing financial hardship associated with the pandemic. For homeowners who can resume their pre-pandemic monthly mortgage payment and where agencies have the authority, agencies will continue requiring mortgage servicers to offer options that allow borrowers to move missed payments to the end of the mortgage at no additional cost to the borrower.
However, many homeowners will need deeper assistance due to pandemic-related income loss. For example, due to the economic crisis caused by the pandemic, some homeowners are earning less than they were before the pandemic. Homeowners with government-backed mortgages that have been negatively impacted by the pandemic will now receive enhanced assistance, especially if they are looking for work, re-training, having trouble catching up on back taxes and insurance, or are continuing to experience hardship for another reason. The new steps the
Specifically, where agencies have the authority and depending on homeowners' financial conditions, agencies will require or encourage mortgage servicers to offer borrowers new payment reduction options to help them remain in their home.
* HUD: The
* COVID-19 Recovery Standalone Partial Claim: For homeowners who can resume their current mortgage payments, HUD will provide borrowers with an option to continue these payments by offering a zero interest, subordinate lien (also known as a partial claim) that is repaid when the mortgage insurance or mortgage terminates, such as upon sale or refinance;
* COVID-19 Recovery Modification: For homeowners who cannot resume making their current monthly mortgage payments, the COVID-19 Recovery Modification extends the term of the mortgage to 360 months at market rate and targets reducing the borrowers' monthly P&I portion of their monthly mortgage payment by 25 percent. This will achieve significant payment reduction for many struggling homeowners by extending the term of the mortgage at a low interest rate, combined with a partial claim, if partial claims are available.
These options augment additional COVID protections HUD published last month. These included the foreclosure moratorium extension, forbearance enrollment extension, and the COVID-19 Advance Loan Modification: a product that is directly mailed to eligible borrowers who can achieve a 25% reduction to the P&I of their monthly mortgage payment through a 30-year loan modification. HUD believes that the additional payment reduction will help more borrowers retain their homes, prevent future re-defaults, help more low-income and underserved borrowers build wealth through homeownership, and assist in the broader COVID-19 recovery.
* FHFA: HUD,
In addition to these new opportunities for borrowers, agencies across the federal government are also taking other steps to support borrowers as our economic and public health recovery continues.
* Extended Term Option: Finally, the
Giving Borrowers the Information They Need to Understand their Options
These new loan modification and payment reduction options will only give borrowers the relief they need if borrowers have the information to understand their options.
* Homeowners can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections, and key deadlines.
* As federal agencies continue working to implement housing assistance for American families,
Borrowers should contact their servicer or housing counselor as soon as possible to learn more about the options available.
* Last month, HUD,
* In addition, FHFA will continue to work with
For borrowers not currently in forbearance, there is still an opportunity to access relief.
* Homeowners with