There are several mortgage assistance programs available to homeowners facing financial difficulties in 2023. Each program has specific features and eligibility criteria. Here's a detailed explanation of the available options:
1. Mortgage Forbearance: This program temporarily pauses your mortgage payments during financial hardship. It's available for both conventional loans (backed by Fannie Mae or Freddie Mac) and government-backed loans (FHA, VA, or USDA). After forbearance, you don't have to repay missed payments in a lump sum but can do so in installments or defer repayment until you sell or refinance the home.
2. Loan Modification: This option involves renegotiating the terms of your mortgage to make payments more affordable, like lowering the interest rate or extending the loan term. For homeowners with FHA, VA, and USDA loans, Biden’s 2021 mortgage stimulus program might still be accessible, potentially reducing payments by up to 25%. Loan modification is typically a last resort for homeowners who can’t refinance or take advantage of other mortgage relief programs.
3. State Housing Counseling Agencies: These agencies, often HUD-approved, can provide information about local mortgage assistance programs and offer free foreclosure prevention counseling.
4. Mortgage Relief Options from Fannie Mae and Freddie Mac: Homeowners with conforming loans have specific mortgage relief options, including forbearance and expanded refinance programs like Fannie Mae’s RefiNow and Freddie Mac’s Refi Possible, which are designed for low- to moderate-income homeowners.
5. Homeowner Assistance Fund (HAF): Established by the American Rescue Plan Act, HAF assists homeowners financially impacted by COVID-19. Funds can be used for mortgage payments, property taxes, insurance, utilities, and other housing-related expenses. Eligibility varies by state and typically includes experiencing a financial hardship associated with COVID-19 and having household income at or below specific limits.
6. COVID-19 Recovery Options by FHA: These include the COVID-19 Recovery Standalone Partial Claim and COVID-19 Recovery Modification. The Standalone Partial Claim allows mortgage payment arrearages to be placed in a zero-interest subordinate lien against the property, payable when the last mortgage payment is made, the loan is refinanced, or the property is sold. The COVID-19 Recovery Modification extends the mortgage term and aims to reduce the monthly payment by modifying the loan balance and interest rate.
7. COVID-19 Home Disposition Options: If you don’t qualify for a COVID-19 Recovery Home Retention Option, you may be considered for a COVID-19 Pre-Foreclosure Sale (short sale) or a COVID-19 Deed-in-Lieu of Foreclosure.
Each of these programs is designed to help reduce monthly payments, address delinquencies, and potentially bring loans current if they are in default. The specific impact on payments and loan status will depend on individual circumstances and the terms of the program. It's essential to consult with your mortgage servicer or a HUD-approved housing counselor to determine the best option for your situation and understand how much your payments can be reduced.