Mortgage Relief In 2021
Most mortgage relief programs, such as HARP and FMERR, have expired. One program does exist, though, if your mortgage is backed by Fannie Mae. The High Loan-to-Value Refinance Program is a mortgage refinance program aimed at homeowners who have high interest rate loans and little equity in their homes. The property can even be under water or of lesser value than the outstanding mortgage. You can apply if you qualify:
- Your loan-to-value is at or above 97.1 percent.
- The loan originated on or after October 1, 2017.
- Youve made your payments on time with no late payments in the past nine months.
- You can prove a valid reason for the refinance.
The Mortgage Reports writes that while the CARES Act offers temporary help, the HIRO reconfigures your loan for the life of the loan without penalties or payback. Two other loan packages are available for FHA and VA loans and are known as “streamline refinancing.”
Primary Dealer Credit Facility And Money Market Mutual Fund Liquidity Facility
On March 20, 2020, the Fed relaunched a Great Recession-era program: the Primary Dealer Credit Facility , which has given loans to primary dealers backed by a wide variety of securities as collateral. There was no set limit to the amount of credit issued. The program ran until March 31, 2021.
To add more liquidity to money markets, the Fed announced the Money Market Mutual Fund Liquidity Facility on March 18, 2020. This program lent money to financial institutions so they can buy money market mutual funds.
This program was similar to the AMLF program launched in 2008 after the collapse of Lehman Brothers caused a major money market fund to fail. It did not have a specific lending limit but ended on March 31, 2021.
The Treasury Department gave the MMLF $10 billion of debt credit protection for the program. On May 5, 2020, the central bank said that participation in the MMLF wouldnt affect the liquidity coverage ratio of participating banks.
Home Affordable Refinance Program
The Home Affordable Refinance Program is a federal program of the United States, set up by the Federal Housing Finance Agency in March 2009, to help underwater and near-underwater homeowners refinance their mortgages. Unlike the Home Affordable Modification Program , which assists homeowners who are in danger of foreclosure, this program benefits homeowners whose mortgage payments are current, but who cannot refinance due to dropping home prices in the wake of the U.S. housing market correction.
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What Help Is Available For My Home Energy Bill
The Low Income Home Energy Assistance Program may be able to help with:
- Assistance to pay your heating or cooling bills
- Emergency services in cases of energy crisis, such as utility shutoffs
- Low-cost home improvements, known as weatherization, that make your home more energy efficient and lower your utility bills.
LIHEAP funds may not be used to pay water and sewer bills.
What Is A Cash
A cash-out refinance is the act of replacing your current mortgage with a new one. When you refinance your home, the new mortgage may have more favorable terms, such as a lower interest rate or a lower monthly payment. Refinancing is a popular option to pursue when interest rates drop.
A cash-out refinance is essentially a new mortgage with a home equity loan amount higher than what you previously owed on your old mortgage. Once the home equity loan is disbursed, the difference between your new loan amount and current loan balance goes to your pockets. This allows any borrower to use their home mortgage to get some cash.
You must have built equity on your home in order to cash-out refinance, and you must usually leave 20% of the equity in the home if you are going with an FHA or conventional loan.
Heres an example of a cash-out refinance at work:
Current Home Value: $200,000
Equity Left in the Home : $40,000
New Loan Amount: $160,000
Cash out: $60,000
You will have to factor in closing costs when determining your maximum cash out, but this gives you a general idea. VA loans allow you to get a cash-out loan for 100% of the home value.
The money that you pocket from a cash-out loan is considered debt, so it is tax-free. Many homeowners commonly reinvest this money back into their homes, using the funds for renovations and other home improvements.
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How To Find Out If Your Loan Is Federally Backed
To find out whether your loan is backed by the federal government, making you eligible for the help noted above, here are some actions you can take:
- Check online. Use loan lookup tools provided by Fannie Mae or Freddie Mac to find out if either of those two government-backed providers owns your mortgage.
- Check the Mortgage Electronic Registration Systems website to find your servicer if you don’t know who that is.
What Else Do I Need To Know Before Starting A Home Repair
Tips for Hiring a Contractor
Finding a good contractor to do repairs and improvements to your home is important. Before hiring a contractor, get tips from the Federal Trade Commission on avoiding home improvement scams. Also, find out how you can report a problem, if you encounter any issues with work you’ve had done on your home.
Watch Out for Utility Lines Before You Dig – Call 811
Before digging on your property, . Utilities will come out to mark the area to help you avoid damaging or being injured by underground utility lines. The timing for processing your request differs from state to state. Some states allow for an online digging request.
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No Extra Penalties Interest Or Late Fees
During any forbearance period granted to you, your servicer cannot charge any penalties, interest, or fees that would not have been charged if you had made your payments on time and in full. Landlords may not charge tenants any fees or penalties for late payment of rent during any forbearance period granted to the landlord.
Emergency Rental Assistance Program
The Emergency Rental Assistance program provides funding to help renters who are unable to pay rent or utilities. The funds are provided directly to states, U.S. territories, local governments, 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.
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Fmerr: The Freddie Mac Enhanced Relief Refinance
Editors Note: Freddie Mac has paused its FMERR program effective August 31, 2021. The agency cited extremely low volume as a reason for pausing the program. We recommend that you check with a lender to learn whether youre refinance eligible. You may have more home equity than you realize thanks to rapidly rising home values across most of the nation.
FMERR which stands for the Freddie Mac Enhanced Relief Refinance is Freddies version of a highLTV program.
You can check Freddies loan lookup tool to see whether the agency owns your loan.
Requirements to qualify for an Enhanced Relief Refinance include:
- Your loantovalue ratio is at 97.01 percent or higher for a singlefamily, primary residence
- Your loan was originated on or after November 1, 2018
- Youve had the loan for at least 15 months
- You have no late mortgage payments in the last 6 months, and no more than 1 in the last year
The FMERR program can be used for existing fixedrate mortgages and adjustablerate mortgages.
And, FMERR is not limited to singlefamily homes or primary residences. Homeowners with 2,3, and 4unit homes, as well as second homes and investment properties, can qualify as long as they meet other eligibility requirements.
A mortgage lender can tell you whether you qualify for this refinance option. You do not have to refinance with your current lender.
Types Of Mortgage Relief Scams
Here are some common warning signs of a mortgage relief scam:
- Scammers will demand payment upfront, before you get any services. Thats illegal and a warning sign to avoid them.
- Scammers may want you to pay only by cashiers check or wire transfer. Scammers like you to pay this way because its hard to get your money back.
- Scammers may try to convince you to transfer the deed to your home to them. The deed is the legal document that proves who owns the home.
Scammers come up with different stories to pressure you into paying them. Knowing some of their come-ons can help you avoid them.
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Stimulus And Relief Package 4
On Dec. 21, 2020, the U.S. Congress passed a $900 billion stimulus and relief bill attached to the main omnibus budget bill. The president signed the bill on Dec. 27, 2020, but urged Congress to increase the direct stimulus payments from $600 to $2,000. Its contents, as of Dec. 28, 2020, included:
If you haven’t received it yet, you can check the status of your stimulus check through the Get My Payment portal offered by the IRS.
Covid Stimulus Programs Overview
Since March 2020, homeowners have had certain protections under the CARES Act.
Originally set to expire at the end of December 2020, these protections have been extended through the beginning of 2021 to continue supporting homeowners affected by the pandemic.
Current mortgage relief programs for conventional loans and governmentbacked loans are as follows:
Foreclosure moratoriums
Currently, mortgage companies cannot start foreclosure proceedings against homeowners who are unable to make home loan payments.
- For conventional mortgages, lenders cannot start a foreclosure until at least July 31, 2021
- For FHA, VA, and USDA mortgages, lenders cannot start foreclosure proceedings until at least July 31, 2021
Mortgage loan forbearance
Homeowners who are unable to pay their mortgages due to COVIDrelated financial hardship can opt into a forbearance plan, which temporarily pauses mortgage payments.
- Homeowners with conventional loans can forbear their mortgages for up to one year. Homeowners who were in a CARES Act forbearance plan as of February 28, 2021, may ask for an additional 3 months of forbearance, for 15 months total
- Homeowners with FHA, VA, and USDA loans can forbear their mortgages for up to 18 months . Homeowners must request initial forbearance before June 30, 2021
Even for the loan types listed above, specific mortgage relief programs and requirements can vary by loan servicer.
Check with your own servicer to find out what type of loan relief you qualify for.
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S To Take Before You Hire A Lawyer
A reputable lawyer doesnt guarantee results, no matter what your circumstances.
Before you hire someone who claims to be a lawyer , or someone who claims to work with lawyers, ask relatives, friends, and others you trust for the name of a lawyer with a proven record of helping homeowners facing foreclosure.
Get the name of each lawyer wholl be helping you, the state or states where lawyers are licensed, and the lawyers license number in each state. Your state has a licensing organization or bar that monitors lawyers conduct. Call your state bar or check its website to see if a lawyer you’re thinking of hiring has gotten into trouble. The National Organization of Bar Counsel has links to your state bar. Get in writing specific information about the work the lawyer or firm will do for you, including the cost, and the payment schedule
If you decide to hire a lawyer, stay in touch with them and keep a file with a record of your conversations, letters, emails, texts, and paperwork.
What If You Need Help Immediately
If your housing expenses are piling up and squeezing your budget, there are a few ways you can give yourself some financial breathing room right now, long before any aid comes your way.
If youve been using credit cards for most of your purchases during the pandemic and are watching the interest charges escalate, you could replace those pricey balances with a single debt consolidation loan at a lower interest rate.
Or try reducing your homeowners insurance premiums by shopping around for a better deal when your policy comes up for renewal. The same comparison shopping approach works well for getting a better price on car insurance.
You also could make a little extra money through a method that’s fairly effortless: A popular app helps you earn returns in the record-shattering stock market merely by investing your “spare change.”
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Hiro Eligibility: Qualify For Mortgage Relief And A Lower Interest Rate
The HIRO qualifications are relatively simple, but they are important. You may be eligible for HIRO if:
- Your current mortgage loan is owned by Fannie Mae*
- Your loan must have been originated after October 1, 2017
- At least 15 months have passed from the note date of the existing loan to the note date of the new home loan
- You have made all your payments on time in the last 6 months
- Your mortgage balance is 97.1% or higher as a percentage of your homes market value, for a one-unit, owner-occupied dwelling
*You may not even know that your mortgage is owned by Fannie Mae. If youre unsure, use this lookup tool on the Fannie Mae website.
If you meet these conditions you are very likely to have access to lower rates but you need to act now before rates go up. Speak with your mortgage lender about relief options.
Federal Housing Administration Announces Additional Covid
WASHINGTON – The Federal Housing Administration on July 23, 2021 announced streamlined COVID-19 Recovery options to help homeowners with FHA-insured mortgages who have been financially impacted by the COVID-19 pandemic bring their mortgage current and remain in their homes. The simplified COVID-19 Recovery waterfall allows mortgage servicers to offer eligible homeowners who cannot resume making their mortgage payments a reduction in the principal and interest portion of their monthly payments. The changes announced today will provide those most in danger of losing their homes a path to deep and sustained recovery, including lower income individuals, families of color, and young, first-time homeowners who have disproportionately suffered economic hardships due to the pandemic.
For homeowners who can resume making their existing monthly mortgage payments, FHA has established a revised COVID-19 Recovery Standalone Partial Claim.
Additionally, FHA is reinforcing today that President Bidens American Rescue Plan Homeowner Assistance Funds , administered to the States by the Department of Treasury, may be used in connection with FHA-insured mortgages or subordinate mortgages as permitted by the jurisdictions HAF program and other requirements.
New COVID-19 Recovery Waterfall
COVID-19 Recovery Waterfall Implementation and Homeowner Assessments
The COVID-19 Advance Loan Modification
Important Information for Homeowners
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Ongoing Federal Reserve Programs
Besides direct asset purchases, the Fed set up several new lending programs, both as part of the CARES Act using funds from the U.S. Treasury Departments Exchange Stabilization Fund as seed capital, and entirely on its own. A number were set up as SPVs, separate legal entities that allow the Fed to lend in ways it normally doesnt. All of these programs have been discontinued except for one: the Paycheck Protection Program Liquidity Facility .
To help small businesses, the Fed launched the PPPLF on April 9, 2020, in concert with the CARES Act. This program lends money to banks so they can, in turn, lend money to small businesses through the Paycheck Protection Program . On April 30, 2020, the program expanded the types of lenders who can participate in the program.
There is no current limit to the amount of credit that can be extended through the program, but it stopped extending credit on July 30, 2021. On June 5, 2020, the Fed said that participation in the PPPLF wouldnt affect the liquidity coverage ratio of participating banks.
Preparing Your Request For Forbearance
Before contacting the mortgage servicer, be prepared to answer a host of questions, such as:
- What are your options to temporarily reduce or suspend your payments?
- Is loan modification an option?
- Will late fees be waived?
- What do I do when my forbearance period ends?
- What payment options do I have at the end of the forbearance period?
- What restrictions and requirements will apply at the end of the forbearance period?
- Will interest be charged on the as-yet-unpaid mortgage payments during forbearance?
- Do I have any rights if I disagree with the mortgage relief determination?
If you were up to date on your payments prior to the COVID crisis and your employment or income status has changed drastically since, you will probably be granted mortgage forbearance. Fannie Mae writes that your credit score will not be affected if you make consistent payments according to the agreed-upon plan.
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Stimulus And Relief Package 35
A supplementary stimulus package, nicknamed Phase 3.5, was signed into law on April 24, 2020. It appropriated $484 billion, mostly to replenish the PPP and the EIDL, and contains additional funding for hospitals and COVID-19 testing.
Another supplementary measure, the Paycheck Protection Program Flexibility Act of 2020, which modified the PPP, was signed into law on June 5, 2020. It made the following changes to the program:
- It allowed businesses 24 weeks to spend the money, up from the initial eight-week period
- It lowered the requirements for loan forgiveness. Businesses now need to spend only 60% of their PPP funds on payroll, instead of 75% previously
- The payment deferment period was extended from six months to when the borrower finds out the amount of their loan forgiveness
- It allowed businesses that received PPP loans to delay paying payroll taxes
- It allowed businesses loan forgiveness if they dont rehire workers who refused good-faith offers of reemployment or are unable to restore operations to levels before the COVID-19 pandemic
- It gave businesses until the end of 2020 to restore their payrolls to pre-crisis levels
- It increased the loan maturity of PPP loans taken out after June 5, 2020, to five years
- It extended the time borrowers have to pay back unforgiven parts of the loan
