On Friday, the Biden administration plans to expand programs to help borrowers who defaulted on mortgages during the Covid-19 pandemic and continue to face economic hardship to stave off a spike in foreclosures in the coming months.
Administration officials said the new modification options will be offered to borrowers with FHA loans and other federally guaranteed mortgages. The changes will aim to increase the duration of their mortgages and limit monthly payments on principal and interest to keep more borrowers in their homes.
Currently, homeowners with guaranteed federal mortgages can skip monthly payments for up to 18 months without penalty and pay later. This exemption expires this fall for borrowers who entered into so-called abstinence plans at the start of the pandemic. Meanwhile, the national foreclosure ban expires on July 31st.
The benefit is for borrowers who are preparing to exit abstinence programs but are unable to resume their normal mortgage payments because they are now earning less than before the pandemic.
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