What You Need to Know About the New Mortgage Relief Program

Millions of American homeowners are behind on their mortgage payments. As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES), foreclosures were halted, and mortgage forbearances were made easier to get.

Even though these protections have been temporarily extended, they will likely be coming to an end soon, but you still have options. Mortgage companies want to help you since foreclosure is not a good option for them either, and the process can cost them thousands of dollars. In an attempt to help homeowners, congress passed a new relief bill. Here are some of the details:


New Payment Relief Program

The newest tool the FHA has introduced to help homeowners stay in their homes is called the COVID-19 Advance Loan Modification. This program is available to homeowners who are struggling to pay the mortgage on their primary residence. They must currently be at least 90 days past due on their mortgage payments or have reached the end of their COVID-19 mortgage forbearance period. Through this modification, homeowners with a 30-year FHA-backed loan can reduce their mortgage payments by at least 25 percent. That is a considerable amount of savings! One of the best parts of the Advance Loan Modification is that all late fees will be waived, and your mortgage account will be brought current through the modification.

Homeowners must be able to show a COVID-19 related hardship to be eligible for this program. They will have to submit documentation of the hardship to their mortgage company. It is also important to note that the loan terms are permanently changed with a loan modification, so be sure to read all disclosures to ensure you understand what is changing. If the mortgage payment relief is still not enough to get you back on track, reach out to your mortgage company. They may have other options available to you.


Forbearances Are Easier to Get

If you do not qualify for the Advance Loan Modification, a mortgage forbearance may still be an option. Forbearance has always been available to struggling homeowners, but thanks to the CARES Act, the requirements for qualifying have become more accessible. Before COVID, it was challenging to get a mortgage company to agree to grant forbearance, but that has changed. Documentation is not needed in most cases, and the Department of Housing and Urban Development is paying especially close attention to cases where Fair Housing violations may be violated.


A mortgage forbearance essentially pauses your payments for a predetermined amount of time. Your account will not be marked as “late,” you will not be charged late fees, and your credit will not be hurt during this time. However, you will have to repay the payments you missed, and your balance will continue to accrue interest. The deadline to request mortgage forbearance has been extended until September 30, 2021, so you still have some time to contact your mortgage company.


Still Not Sure What to Do?

If your goal is to keep the current home you live in, we suggest that you get in touch with your mortgage company. Despite contrary belief, the mortgage companies and lenders do not really want to see someone lose their home. The mortgage companies should be able to work with you if you are upfront with them.

However, if all of this is overwhelming and you do not know what to do, you always have the option to sell your home. Home values have increased by upwards of 20% in the last year alone in some areas, so you likely have equity in your home. Your best bet is to connect with a local real estate agent in your area to discuss your personal situation and all of the options available to you. If you do not already have a relationship with an agent in your area give us a call at LUXRE, we are happy to help guide you and help you determine what is the best course of action for you and your family. If selling is what you decide to do, an agent can guide you through the prep work needed to get your home in its best condition and ready to go to market. They will be able to suggest the right strategies to market your home so that it sells quickly and for top dollar in your market.



Whether you are a first time homebuyer or you're ready for a bigger home and you've decided to sell,
LUXRE is here for YOU every step of the way!

Like this article?

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest