White House Launches Coronavirus Mortgage Assistance Programs – RISMedia |

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Homeowners financially hit by the pandemic now have several new mortgage payment relief options that will help them get comfortable and allow them to stay in their home, according to the White house

“Right after taking office, President Biden made public health and the economic crisis a priority with the American Rescue Plan,” Marcia L. Fudge told HUD. “As Americans return to work and our economy continues to recover, we are taking targeted steps to ensure that financially affected homeowners from COVID-19 have the support they need to stay in their homes. Housing affordability is at its worst, and the loss of your home is now going to ruin households. ”

FHA
For FHA-backed mortgages, these two cascading recovery options have been optimized to reduce paperwork and allow service providers to make a larger reduction in payments for eligible homeowners.

Standalone COVID-19 Recovery Partial Claim: This option is for homeowners who can resume their current mortgage payments. Delayed mortgage payments must be placed in a subordinated lien with a zero interest rate on the property, which is paid on termination of the mortgage – usually when the homeowner refinances or sells the home.

COVID-19 recovery modification: This option is for homeowners who are unable to renew their current monthly mortgage payments. It extends the term of the mortgage to 360 months at a fixed rate and aims to reduce the borrower’s monthly principal and the percentage of their monthly mortgage payment. A COVID-19 recovery modification must include a partial claim if the homeowner has the funds to make a partial claim.

“This next step in the evolution of the FHA response to COVID-19 is an important and meaningful way to help those homeowners who will be at a critical point in their recovery in the coming months from abstinence to permanent, sustainable payments,” Principal said. FHA Deputy Assistant Secretary and Housing Authority Lopa Colluri. “We can help more homeowners who, through no fault of their own, continue to feel the financial impact of the pandemic and are unable to pay back their mortgage payments. Many of these homeowners desperately need more pay cuts to stay in their homes.

USDA
USDA Special Action Against COVID-19: This will help borrowers to reduce their monthly P&L payments by 20%. New opportunities include lower interest rates, term extensions, and mortgage loan advance payments that can help cover late mortgage payments and related costs. Borrowers will first be assessed for an interest rate cut and, if additional relief is still required, they may be considered for a combined rate cut and extension. In cases where the combination of rate cut and term extension is not enough to achieve a 20% payment reduction, the third option will be used to achieve the target payment, combining rate reduction and term extension with an advance to repay the mortgage loan.

VA
COVID-19 return modification: Provides several tools to help selected borrowers reduce their monthly P&I mortgage payments by 20%. In some cases, large discounts are possible. The new COVID-19 return option, for example, allows the VA to purchase from the service provider the borrower’s COVID-19 debt and, if necessary, additional principal amounts (subject to an overall cap corresponding to 30% of the borrower’s outstanding principal. borrower from COVID-19). The COVID-19 refund will be set as the junior collateral paid by the VA at a 0% interest rate. In addition, service personnel can now significantly reduce the monthly dollar amount by modifying the loan and adding up to 120 months to the original maturity date (that is, the total maturity can be up to 480 months).

FHFA
Existing COVID FHFA Loss Mitigation Options provide service providers with home ownership retention tools for borrowers. The tools include a deferred payment option that allows borrowers to resume their pre-COVID monthly payment after deferring up to 18 months of missed mortgage payments in an interest-free balloon. Missed payments are not refundable until the homeowner sells or refinances the property. Borrowers who need more help can get a loan modification aimed at reducing their monthly mortgage payments by up to 20%. The Flex modification (Flex) capitalizes all overdue amounts, extends the mortgage to 40 years, and in some cases lowers the interest rate and provides for a deferral of repayment of the principal.

The White House also announced other programs aimed at economic recovery:

Homeowners Assistance Fund: It is a component of President Biden’s US Rescue Plan, which provides $ 9.961 billion to states, DCs, territories and tribes to help homeowners affected by the COVID-19 economic crisis. These funds can be used to help with mortgage payments, homeowner’s insurance, utility bills, and other specified purposes.

Extended option: The State National Mortgage Association (Ginny Mae) recently announced a new security product for modified loans that will give government agencies the flexibility to extend mortgages up to 40 years if they choose to do so, for borrowers who are on hold on mortgages and benefit. from the reduction in monthly payments associated with this option.
Jeannie Mae expects this renewed product to be available for use in late 2021.

More information about the program can be found here



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