Mortgage Assistance Options
Throughout this month’s blog we’ve been discussing your options for settling mortgage arrears through bankruptcy in Alabama. The timing is almost perfect in conjunction with this past week’s announcement from the White House for renewed mortgage assistance programs for those financially affected by the COVID-19 pandemic and its variants. Nearly 2 million, 1.86 million American mortgage borrowers to be exact, are currently in active COVID-19 forbearance plans and unable to pay their current mortgage payments. President Biden and our current administration made it clear in their announcement that one of their top priorities is to help those affected by COVID-19 get current on their mortgages, afford their payments, and help Americans stay in their homes. Throughout this blog, we’ll break down the newly announced assistance program options and the different ways you can qualify and apply for them. As always, if you or your homestead are located in the Tuscaloosa, Jasper, Fayette, Walker, Winston, Marion, Lamar, Bibb, counties – and you’re behind on your mortgage or other related bills, then we recommend calling our office TODAY at 205-349-1280 for a free consultation.
First things first, to be clear, these below discussed programs still only apply to those with a federally funded or federally held mortgage – those lenders include, but are not limited to, The Federal Housing Administration (FHA), The Federal Housing Finance Agency (FHFA) United States Department of Agriculture (USDA), The Department of Housing and Development (HUD), The Department of Veteran’s Affairs (VA), Fannie Mae, and Freddie Mac.
FHFA backed COVID-19 Mortgage Assitance Options:
Currently, FHFA has a COVID assistance option that allows their borrowers to defer payments for up to 18 months worth of missed payments in total with zero percent interest which do not have to be repaid until either the end of the mortgage, the homeowner refinances the mortgage, or the home is sold. Now, a loan modification option has been added that allows for a reduction in their monthly mortgage payment of up to 20% of their current monthly mortgage payment by potentially extending the mortgage up to 40 years and lowering the interest rate.
VA backed COVID-19 Refund Mortgage Loan Modification:
This option for VA backed mortgages also allows borrowers to reduce their total monthly mortgage payment by up to 20% of their current monthly payments on principal and interest. This refund modification works by setting up the refund as a junior lien against their home at a 0% interest rate, payable to the VA. In addition, borrowers can modify their mortgage loan and add up to 120 months to their loan’s original maturity date, or extend their total loan term up to 480 months.
USDA backed COVID-19 Special Relief Measure:
Again, this option allows current mortgage holders with the USDA to reduce their monthly principal and interest payments by up to 20% of their current payments. The options for doing this include first, reducing their current interest rate, then, extending their current loan term, and – if still needed to achieve the 20% reduction target- receive a recovery advance on their mortgage arrears.
FHA backed COVID-19 Mortgage Assistance Options:
- COVID-19 Recovery Standalone Partial Claim. This option is for borrowers and homeowners who are able to resume their monthly mortgage payments but are not able to afford their arrears payment, as well, or they lack the ability to be able to catch up those arrears. This partial claim option allows those arrears to be placed as a lien, with zero-percent interest, against the property to either be paid at the end of the mortgage, when the mortgage is refinanced, or when the home is sold.
- COVID-19 Recovery Modification: This option is for homeowners who are not able to make their current monthly mortgage payments. This allows them to extend the term of their mortgage to a total of 360 months while keeping a fixed interest rate – thus allowing them the option of reducing their monthly principal & and interest payments. If you’re applying for this type of loan modification, it must first include a partial claim discussed above- if the homeowners have those partial claim funds available to them.
If you’re interested in applying for or simply learning more about any of these aforementioned programs and COVID-19 mortgage assistance options, you can find more information, including your local loan servicer, here and reach out to them for more individualized information.