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There Are Still Mortgage Relief Programs For Struggling Homeowners

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Oct. 13 2021, Published 7:18 a.m. ET

Although the deadline for mortgage forbearance programs ended Sept. 30, 2021, mortgage stimulus relief programs are still available for financially strapped homeowners.

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During the COVID-19 pandemic, which left many Americans unemployed and strapped for cash, the Coronavirus Aid, Relief, and Economic Security (CARES) Act helped struggling homeowners with assistance by protecting government-backed mortgages through Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), Veterans Affairs, and the U.S. Department of Agriculture (USDA).

Under the mortgage relief programs, homeowners could apply to forbear their monthly mortgage payment for up to 18 months. The deadline for forbearance enrollment was Sept. 30, 2021.

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Biden relief program reduces mortgage payments by 25 percent

In July 2021, Joe Biden also announced a new round of mortgage relief that would enable borrowers with FHA, VA, or USDA loans to reduce the principal and interest on their home loans by up to 25 percent.

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“This brings options for homeowners with mortgages backed by HUD, USDA, and VA closer in alignment with options for homeowners with mortgages backed by Fannie Mae and Freddie Mac,” Biden said. Fannie Mae and Freddie Mac loans already enable borrowers to request a 20 percent reduction in their payments.

“Many homeowners will need deeper assistance due to pandemic-related income loss,” Biden said. “For example, due to the economic crisis caused by the pandemic, some homeowners are earning less than they were before the pandemic.”

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According to the White House, in June 2021, about 1.75 million Americans remained in forbearance. That number was down 50 percent from its peak during the pandemic. Although the current hot housing market offers a way for you to get top dollar for your home, if you don’t want to sell, there are other options for keeping your home.

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Some of the mortgage relief programs offered

FHA assistance program

If your mortgage is an FHA-backed loan and you can resume making your current mortgage payments, you have the option to do so with a zero-interest, subordinate lien (or partial claim) that is repaid when you either sell the home or refinance.

For homeowners who can’t resume their monthly mortgage payments, the COVID-19 Recovery Modification extends the mortgage term to 360 months and reduces the principal and interest on the monthly payments by 25 percent.

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VA assistance program

The VA’s COVID-19 Refund Modification provides multiple tools to help reduce monthly principal and interest mortgage payments by 20 percent. Larger reductions are possible in some cases. Monthly payments can also be reduced by adding up to 120 months onto the original maturity date, extending the total repayment term up to 480 months.

USDA assistance program

The USDA COVID-19 Special Relief Measure provides new options for borrowers to reduce their monthly payments by 20 percent, including reducing the interest rate, extending the loan term, and offering a mortgage recovery advance, which can help cover past-due mortgage payments and related costs.

Homeowner Assistance Fund

Included in Biden’s American Rescue Plan, the Homeowner Assistance Fund provides $9.961 billion to assist homeowners with mortgage payments, homeowner’s insurance, utility bills, and more. This program is available for all borrowers, regardless of whether they have their mortgage through a government-backed agency.

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