Biden's Mortgage Stimulus Helps Homeowners Amid COVID-19 Pandemic

The U.S. government has stepped in multiple times since the onset of the COVID-19 pandemic to provide assistance to needy and struggling families. Although there were rumors of a fourth stimulus check, it appears fairly certain that the three stimulus checks are the end of that financial help.

Even though the fourth stimulus check isn’t happening, certain forms of financial assistance are still available to Americans for certain needs. For housing, the Biden administration earmarked $10 billion in housing assistance from the March pandemic relief bill. There have been other forms of relief for renters and homeowners as well.

Under President Trump and President Biden, homeowners have been able to pause mortgage payments on their homes temporarily due to economic hardships amid the COVID-19 pandemic. The mortgage forbearance enabled homeowners to pause mortgage payments for up to 18 months.

The deadline to apply for mortgage forbearance was September 30, 2021, so homeowners aren't able to sign up for the program anymore. However, additional assistance is available to help prevent Americans from losing their homes to foreclosure.

For some homeowners, as mortgage forbearance comes to an end, making their full monthly payments might still be hard even as the job market improves. In July, the Biden administration released information about new modifications to mortgages aimed at easing the financial burden of mortgage payments on borrowers.

As the White House stated in a July press release, “many homeowners will need deeper assistance due to pandemic-related income loss.”

Homeowners with government-backed mortgages (those backed by USDA, HUD, and the VA) are eligible for a reduction in their total payment amount. Where agencies have the authority to do so, they will require mortgage servicers to offer reduced payment options to homeowners who need it.

The program's goal is to reduce homeowners’ monthly payments, including principal and interest, by up to 25 percent. This is similar to programs for loan servicers Fannie Mae and Freddie Mac.

For homeowners with a loan insured by the Federal Housing Administration, if you can resume payments, there's the option of taking a subordinate lien at zero interest.

Individuals with FHA loans who aren't able to resume payments can use COVID-19 Recovery Modification. This extends the loan term to 360 months and aims to reduce payments by 25 percent of the original principal and interest totals.

Borrowers with USDA-backed home loans might be eligible for up to a 20 percent reduction in their monthly payments. This can be achieved through a combination of an interest rate reduction and term extension. A third option, if needed, provides a mortgage recovery advance.

The VA (Department of Veterans Affairs) also has similar COVID-19 mortgage relief. Qualified borrowers can reduce their payments by up to 20 percent. A COVID-19 Refund Option is an additional option. It provides a secondary lien payable to the VA at a zero interest rate.

The Consumer Finance Protection Bureau provides more information for specific housing situations.