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Struggling to Pay Your Mortgage? The Government’s Newest Assistance Options

Jul 19 2021

This is part of our ongoing series on emergency mortgage assistance and how to handle your loan in a crisis.

The frenzy of the pandemic may be winding down, but for millions of Americans, hardships linger in its wake. Many, for example, remain out of work and struggling to pay their mortgage bills.

In recognition of these ongoing difficulties, the federal government announced additional programs to help homeowners avoid foreclosure or just make their mortgages more affordable.

Below, you’ll find a breakdown of these latest efforts.

Note: Visit ConsumerFinance.gov or call the contact number on your monthly mortgage statement to find out more information on these and any other mortgage relief options.

If you need assistance in understanding your options or with contacting your servicer, consider reaching for help from a housing counselor.

FHA COVID-19 Advance Loan Modification

The Federal Housing Administration (FHA) has a new program to offer payment relief to eligible homeowners.

The COVID-19 Advance Loan Modification (ALM) is a permanent change to your mortgage terms that reduces your monthly payments by at least 25%.

This option is available to borrowers who are currently 90 days or more behind on their mortgage payments, or are at the end of their COVID-19 Forbearance. To find out if you qualify, call the contact number on your monthly mortgage statement.

(What’s a loan modification? We break it down.)

All other mortgage relief options will remain available to borrowers that do not accept the COVID-19 ALM for any reason.

Interest rate reduction

Under Freddie Mac and Fannie Mae’s Flex Modification program, more homeowners are eligible to receive lower interest rates on their mortgages.

Interest rate reductions are now available for homeowners with COVID-related long-term financial hardship regardless of their loan-to-value ratio. If you weren’t eligible before, check to see if you are now.

Your loan-to-value ratio is the difference between the amount remaining in your mortgage loan amount and the market value of your home.

FHA COVID-19 Forbearance requests

To assist homeowners who are still at risk of falling behind on their mortgage payments due to COVID-19, the FHA is allowing homeowners to request a forbearance any time before Sept. 30, 2021. A COVID-19 Forbearance received before Sept. 30 can be for a term of up to six months.

(What’s a forbearance? We explain.)

This option is available to homeowners who haven’t previously received a COVID-19 Forbearance.

Confused? Our guide to mortgage relief explains COVID-19 Forbearance and other available options if you can’t pay your mortgage.

If you already have a COVID-19 forbearance and you’re still experiencing financial hardship, call your mortgage company to ask about an extension.

FannieMae RefiNow

To help homeowners take advantage of low-interest rates, FannieMae is offering a new refinance program.

As of June 5, qualifying low-income homeowners can save hundreds of dollars in their monthly mortgage payments thanks to RefiNow.

RefiNow can help you by:

  • Saving you at least half a percentage point on your mortgage interest rate
  • Lowering your monthly payments by at least $50
  • Offering a $500 credit for an appraisal obtained during the refinance

Learn more about RefiNow from Fannie Mae, or contact your lender or loan servicer to find out if you’re eligible.

Not sure who owns your loan? Check the Fannie Mae loan lookup tool.

Renewed calls to request assistance

If you may fall or already are behind on their mortgage payments or are struggling to comply with the terms of your relief program, mortgage companies are requesting to be contacted immediately.

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