The 2020 Coronavirus, Aid, Relief, and Economic Security (CARES) Act required lenders holding federally backed single-family mortgages to stop payments from borrowers for a maximum of 360 days in the event that the coronavirus outbreak caused them to become financially vulnerable. Similar but shorter forbearance of 90 days was available to owners of multifamily units with federally backed mortgages.
Following the 2020 financial crisis, further mortgage relief was made possible by subsequent legislation, such as the Consolidated Appropriations Act of 2021, the American Rescue Plan Act of 2021, and presidential executive actions.
What’s the difference between mortgage relief and mortgage assistance?
- Mortgage relief generally refers to programs that modify your existing mortgage terms, such as loan modifications, forbearances, and refinancing options. These programs are typically offered directly by lenders or through legal mechanisms.
- Mortgage assistance encompasses external support mechanisms like government grants, interest-free loans, and counseling services. These resources provide financial aid or guidance to help you manage your mortgage challenges without directly altering the loan terms.
Let’s dive into the various mortgage relief and mortgage assistance programs available in 2024:
1. Homeowner Assistance Fund (HAF): Established in 2021, the HAF offers financial assistance to homeowners facing foreclosure or delinquency. You can use these funds to catch up on past-due mortgage payments, cover housing-related bills like insurance and property taxes, and even make home repairs. While the HAF is closed in some states, it’s still operational in others. Check the Consumer Financial Protection Bureau (CFPB) website for the latest information.
2 State and Local Programs: Many states and local governments offer their own mortgage relief programs, including grants and deferred loans Explore the options available in your state and check for additional resources at the county or city level. Your local housing finance agency is a good starting point.
3 Housing Counseling: HUD-approved counseling agencies can provide valuable guidance and connect you with local government and non-profit agencies offering mortgage relief They also offer free foreclosure prevention counseling,
4. Loan Refinancing: Refinancing your mortgage can help you adjust your existing loan to more favorable terms, lowering monthly payments, reducing interest rates, or changing the mortgage term.
Here are some specific refinancing programs to consider:
- Fannie Mae RefiNow: Designed for homeowners who may not qualify for conventional refinancing, this program offers a minimum 0.5% interest rate reduction and covers home appraisal fees.
- Freddie Mac Refi Possible: This program helps low- to moderate-income homeowners refinance their mortgages with a minimum 0.5% interest rate reduction and the option to roll closing costs into the loan amount.
- Streamline Refinancing: Homeowners with government-backed FHA, VA, and USDA mortgages can use this program to refinance even if their home has negative equity. Streamline refinancing offers benefits like less paperwork, lower closing costs, and below-market interest rates.
What to do when you can’t pay your mortgage:
- Communicate with your lender: Don’t hesitate to reach out to your lender as soon as you anticipate difficulty making your mortgage payment. They may have options like forbearance or loan modification to help you through this temporary setback.
- Review your budget: Analyze your finances and identify areas where you can cut expenses or redirect funds towards your mortgage.
- Explore mortgage assistance programs: Research federal, state, and lender-specific programs that can provide financial relief during challenging times.
- Consider legal advice: If your situation is complex or you’re facing foreclosure, seeking legal counsel can be beneficial. Lawyers can guide you on your rights, options, and negotiations with lenders.
Beware of mortgage relief scams:
- Legitimate programs won’t require upfront payments.
- Report suspicious websites to the Consumer Financial Protection Bureau.
- Choose refinancing lenders based on your research and preferences, not unsolicited offers.
Financial hardship can be overwhelming, but there are a number of mortgage relief and mortgage assistance programs available to help you regain control and ensure stability for your home. Remember, you’re not alone! Investigate these choices right now to start the process of safeguarding the future of your house.
Additional Resources:
- The Mortgage Reports: https://themortgagereports.com/
- Homeowner Assistance Fund: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/homeowner-assistance-fund
- Consumer Financial Protection Bureau: https://www.consumerfinance.gov/topics/mortgages/
- HUD-approved Housing Counseling Agencies: https://www.hud.gov/topics/housing_counseling
Let’s work together to navigate these challenges and find the best solution for your unique situation.
Emergency Rental Assistance Program
Funding is available to tenants through the Emergency Rental Assistance (ERA) program if they are unable to pay their rent or utilities. The funds are provided directly to states, U. S. territories, local governments, American Indian tribes, Tribally Designated Housing Entities, and the Department of Hawaiian Home Lands. These entities may use ERA funds to provide assistance through existing or newly-created rental assistance programs.
You must apply for ERA assistance through the relevant state or entity because the Treasury distributes ERA funds to states and other entities.
Mortgage Forbearance (Paused Payments)
Homeowners with government-backed mortgages who have encountered financial hardship due to COVID-19 may be eligible for forbearance, which allows you to stop making mortgage payments for up to 18 months (including extensions).
- If Freddie Mac or Fannie Mae is backing your mortgage, you will have 18 months of complete forbearance. As of September, you had to be enrolled in an active forbearance plan. 30, 2021 to be eligible. The maximum forbearance is 12 months otherwise.
- For as long as 18 months, you can ask for a complete forbearance if your mortgage is guaranteed by the VA, USDA, or HUD/FHA. On or before September, you have to have requested an initial forbearance plan. 30, 2021 to qualify. The maximum forbearance is 12 months otherwise.
On September 22, the Federal Housing Finance Agency (FHFA) announced an extension of the forbearance deadline for those who owned multifamily rental properties with federally backed loans. 24, 2021. If you are granted forbearance for the multifamily property, you must:
- Notify your tenants in writing of the safeguards that apply to them during the forbearance period.
- While your property is in forbearance, you both agree not to evict them for failing to pay rent.
- If tenants need to leave for other reasons, give them at least 30 days’ notice.
- Decide not to impose penalties or late fees for unpaid rent.
- Give renters the option to pay back past-due rent gradually rather than all at once.
If you are offered forbearance by a private lender or under the CARES Act, carefully review the terms before signing. It’s best to have the missing payments added to the end of your mortgage term. Certain lenders, especially those in the private sector, might have unique conditions that only temporarily postpone payments before requiring a balloon payment.
Mortgage lending discrimination is illegal. If you think you’ve been the victim of discrimination because of your age, national origin, race, religion, sex, marital status, use of public assistance, or handicap, there are actions you can take. One option is to file a report with the Consumer Financial Protection Bureau (CFPB) or with HUD.
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FAQ
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