How the Mortgage Relief Plan Will Work
“Homeowners with government-backed mortgages that have been negatively impacted by the pandemic will now receive enhanced assistance, especially if they are looking for work, re-training, having trouble catching up on back taxes and insurance, or are continuing to experience hardship for another reason,” the administration stated.
FHA
Homeowners will be able to reduce monthly principal and interest costs by 25%.
USDA
Buyers can reduce their monthly P&I by up to 20%. “New options include an interest rate reduction, term extension, and a mortgage recovery advance, which can help cover past-due mortgage payments and related costs. Borrowers will first be assessed for an interest rate reduction and if additional relief is still needed, the borrowers will be considered for a combination rate reduction and term extension.”
VA
Buyers can also reduce their monthly P&I by up to 20%. But in some cases, even larger reductions could be possible.
“One such tool is the new COVID-19 Refund option, where VA can purchase from the servicer a borrower’s COVID-19 arrearages and, if needed, additional amounts of loan principal (subject to an overall cap corresponding to 30% of the borrower’s unpaid principal balance as of the first day of the borrower’s COVID-19 forbearance).”
“In addition, servicers can now achieve significant reductions in the dollar amount for monthly payments by modifying the loan and adding up to 120 months to the original maturity date (meaning the total repayment term can be up to 480 months).”
How to Get Mortgage Relief?
“Borrowers should contact their servicer or housing counselor as soon as possible to learn more about the options available.”
