40 Year Mortgages May Soon Be An Option For Some Homeowners In Need

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Some patient homeowners may soon be able to extend their loans due to Jeannie Mae's recent move.  Here, the roofline of new housing appears over some of the more traditional homes in the Houston Fifth Ward area on Tuesday, June 22, 2021.

Some patient homeowners may soon be able to extend their loans due to Jeannie Mae’s recent move. Here, the roofline of new housing appears over some of the more traditional homes in the Houston Fifth Ward area on Tuesday, June 22, 2021.

Elizabeth Conley, Houston Chronicle / Staff Photographer

Millions of homeowners financially affected by the pandemic have been allowed to temporarily suspend or reduce their mortgage payments. When they resume payments, the federal government is asking the mortgage service companies it supports to find a way to work with homeowners beyond requiring all missed monthly payments to be paid in a lump sum.

One option under consideration to enable homeowners to make up for lost payments in a year is to refinance into a loan for a longer term. Some homeowners with federal-backed mortgages may soon change a 30-year loan to pay off over 40 years.

State mortgage company Ginnie Mae is taking steps to support such arrangements by supporting the securitization of 40-year mortgages.

“It is important that Ginny Mae issuers have secondary market liquidity for options that our agency partners deem suitable to support homeowners in distress,” said Michael Dryan, acting executive vice president of Ginny Mae. in a statement… He noted that extending the term to 40 years could significantly reduce monthly payments and help families keep their homes.

Ginny Mae expects she will be ready to start supporting the securitization of such loans by October. But the decision whether or not to offer 40-year mortgages to homeowners coming out of abstinence is up to the Federal Housing Administration, the Department of Veterans Affairs, the USDA, the Department of Housing and Urban Development, and the Housing Administration. Government and Indian Homebuilders, which issue loans that Jeannie Mae pooles for sale in secondary markets.



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