What Is The Government Mortgage Relief Program

Q: Does A Homeowner Have Income As A Result Of The Governments Having Paid Some Of The Homeowners Mortgage Loan By Making A Pra Investor Incentive Payment To The Holder Of The Loan

A2: No. This payment by the government on behalf of the homeowner is excludible from the homeowners income under the general welfare exclusion. Excluding this amount from the homeowners gross income is consistent with the treatment of Pay-for-Performance Success Payments, which are addressed in Revenue Ruling 2009-19 PDF.

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Making Special Payment Arrangements

Your financial institution may offer special payment arrangements unique to your situation. With this option, you and your financial institution agree to recover late payments over the shortest period, within your capacity. Special payment arrangements can include reducing your mortgage payments for an agreed-upon time.

Additional Details On Federally Backed Mortgage Relief Options

Fannie Mae

Aside from the CARES Act protections, Fannie Mae normally offers these relief options for homeowners in financial distress:

• The ability to suspend or reduce your monthly mortgage payments for up to 18 months in increments of up to three or six months.
• No late fees during your forbearance period.
• Repayment options after forbearance ends, such as a gradual repayment plan or a loan modification.

Freddie Mac

As the other GSE that fuels the mortgage market in the U.S., Freddie Mac offers relief protections for the loans it owns by:

• Providing forbearance for up to 18 months.
• Not charging late fees or other penalties.
• Offering the option to either maintain previous mortgage payments or request a loan modification after the forbearance period ends.

NOTE: Borrowers who have mortgages owned by Fannie Mae or Freddie Mac and have made three consecutive, on-time payments after their forbearance period ends are eligible to refinance their mortgage or qualify for a new one, the GSEs announced May 19.

Those who continued to make mortgage payments while in forbearance are also eligible for a new or refinanced loan. This may be especially helpful for homeowners who want to take advantage of recent record-low mortgage rates.

FHA loans

Backed by the Federal Housing Administration, FHA loans have additional relief options, outside of whats included in the CARES Act. For example, FHA lenders wont require a lump-sum repayment of whats owed after your forbearance period ends.

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How Covid Mortgage Modifications Work

For homeowners struggling to pay the mortgage, soaring home values offer one way out: With the U.S. housing market faces an extreme shortage of homes for sale, you could sell your home and become a renter. If thats not an ideal choice for you, the federal mortgage system says its offering lower rates and longer terms to slash payments and let homeowners keep their homes. The rundown:

The reductions apply only to principal and interest, not to other costs that might be combined with your mortgage payment, such as homeowners insurance and property taxes.

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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Streamline Refinancing For Fha Va And Usda Loans

Popular mortgage relief programs since 2009 have only been available to homeowners with conventional mortgages backed by Fannie Mae or Freddie Mac.

But what if your loan is government-backed?

Homeowners with federally-backed FHA, VA, and USDA mortgages have access to different mortgage programs than those with conventional loans.

Namely, they can use a Streamline Refinance.

The Streamline Refinance is a special mortgage refi program for people with government-backed loans. Its similar to a mortgage relief refinance because you can use a Streamline Refi even if your home is underwater or has very little equity.

And a Streamline Refinance has other benefits, too.

• Theres less paperwork because you dont have to re-verify your income or employment or get the home appraised
• Government-backed loans typically have below-market mortgage interest rates
• Closing costs are typically cheaper

Homeowners can qualify for an FHA Streamline if theyve made at least three consecutive on-time payments on their existing FHA loan.

Even if you make your three consecutive payments while in forbearance, you may qualify for FHA Streamline refinancing. The Department of Housing and Urban Development , which oversees the Federal Housing Administration, is one of the more lenient housing agencies.

For a VA Streamline Refinance , the rules are more lenient.

Fmerr Eligibility: Qualify For Mortgage Relief And A Lower Interest Rate

You may be eligible for FMERR if:

• Your current mortgage is owned by Freddie Mac*
• Your loan was originated on or after November 1, 2018
• Your LTV is at least 97.01% for a one-unit, owner-occupied resident
• 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 Freddie Mac. If youre unsure, use this lookup tool on the Freddie Mac 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.

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If I Am A Landlord Is Financial Assistance Available

If youre a landlord struggling to pay your mortgage because your tenants have been impacted by COVID-19 and are having difficulty paying their rent, the Consumer Financial Protection Bureau has helpful information on state and local programs offering rental assistance. Eligibility varies, but landlords can often apply directly, and may be able to receive direct payments. Each rental assistance program has conditions, and landlords and tenants should contact the program in their area to find out how to get started. Or if you would like personalized help from a HUD-approved housing counselor, call our Disaster Response Network directly at . These counselors can help you navigate the rental assistance application process for your tenants.

Types Of Reverse Mortgages

• Federally Insured Reverse Mortgages – Known as Home Equity Conversion Mortgages
• Proprietary Reverse Mortgages
• Single Purpose Reverse Mortgages

When finding a lender remember:

• Be suspicious of anyone claiming that you can own a home with no down payment
• Seek out your own reverse mortgage counselor
• Never sign anything you do not fully understand
• Make sure the loan is federally insured

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Will My Home Be Foreclosed Now That Forbearance Has Ended

Though the forbearance period has ended for most borrowers, the CFPB and the Biden Administration have put new rules in place to prevent a massive wave of imminent foreclosures. Lenders are required to allow borrowers many options including:

If none of those options are possible for borrowers, there are still additional restrictions in place through Dec. 31, 2021. Lenders can only start the foreclosure process if the borrower has abandoned their property, has not responded to inquiries from the lender for more than 90 days , or was more than 120 days behind on their mortgage prior to the pandemic .

Relief Programs For Renters

Renters have protections during COVID, too, although theyre less robust than the relief programs offered to homeowners.

• Renters cannot be evicted until at least March 31, 2021, if they are behind on payments due to COVID-related financial hardship
• $25 billion in rental assistance will be available through state and local governments to help renters who cant make payments

To qualify for rent relief, tenants will have to meet certain conditions, including:

• The household cant make more than 80% of their areas median income
• Renters must be experiencing financial hardship related to the pandemic
• The renter must be at risk of losing their housing

Since funds will be distributed locally, tenants and landlords hoping to qualify for relief will need to check relief programs operating in their area.

For starters, check this spreadsheet of local housing programs, compiled by the National Low Income Housing Coalition, to find rental assistance programs currently operating in your state or county.

What to do if youre behind on rent

The National Low Income Housing Coalition has a lookup tool that can help renters find state and local assistance. But you must still keep in touch with your landlord if youre having trouble paying your rent.

Remember: If you forestall payments, theyll likely be due as soon as coronavirus troubles pass. So make sure you and your landlord are clear on two things:

Get the agreement in writing if possible.

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Q: Does A Homeowner Have Income As A Result Of The Government’s Having Paid Some Of The Homeowners Mortgage Loan By Making A Pra Investor Incentive Payment To The Holder Of The Loan

A2: No. This payment by the government on behalf of the homeowner is excludible from the homeowners income under the general welfare exclusion. Excluding this amount from the homeowners gross income is consistent with the treatment of Pay-for-Performance Success Payments, which are addressed in Revenue Ruling 2009-19PDF.

Is There A Congress Mortgage Stimulus Program

With Covid-era relief efforts winding down, some Congress mortgage stimulus programs are coming to a close.

Fortunately, homeowners who need to lower their mortgage payments are not out of options.

Millions of homeowners are still refinance eligible. And with a wide variety of mortgage programs available, even those with little or no equity might qualify for a lower rate and cheaper monthly payment.

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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 that 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 dont know who it is.

Q: Does The Insolvency Exclusion Apply To Amounts Discharged Under A Pra Principal Reduction

A5: The insolvency exclusion may apply to a discharge of indebtedness under a PRA principal reduction to the extent that the taxpayer is insolvent when the discharge occurs. For further discussion of the insolvency exclusion, see page 4 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments PDF.

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What Mortgages Are Eligible

Not all mortgage holders can benefit from this Congress mortgage relief effort. Primarily, the mortgages eligible must be backed by the Federal government. Freddie Mac and Fannie Mae are the two main government-sponsored enterprises that buy and sell mortgages. If you have a mortgage from either of these two GSEs, you may qualify for home loan payment relief. Other Federal mortgages, depending on your circumstances, may also qualify. These are VA, FHA, and USDA mortgages.If you dont know what type of mortgage you currently hold, call your lender. They will be able to discuss the options open to you.

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Cares Act Mortgage Forbearance: What You Need To Know

UPDATE: Since this video was released, federal regulators have made it clear that if you receive a forbearance under the CARES Act, your mortgage servicer cannot require you to repay your skipped payments in a lump sum once the forbearance period ends. Also, wait times for most call centers have eased, we encourage you to contact your servicer to learn more.

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Want To See How Much You Can Save Heres How:

Fetcharates free service helps homeowners easily get quotes from lenders likely to approve their loan and help find them super low rates. In just a few minutes, any borrower could get a side-by-side rate comparison from qualified lenders and find savings. Once you have chosen the lender right for you, that lenders will work with you to easily lock in your rate and claim your savings.

There are no obligations to check rates and almost all homeowners have been surprised to see their monthly savings.

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Who Qualifies For Fha Cash

An FHA cash-out loan allows homeowners with lower credit scores or a less than impressive debt-to-income ratio to access the equity of their home at a current low rate.

The basic requirements to qualify for an FHA cash-out refinance are:

• The home mustve been refinanced but be your primary residence, and you must have lived in the home for at least 12 months prior to applying for the loan
• You must have made on-time mortgage payments for the past 12 months prior to applying for the loan

These are the basic requirements, but there might be additional requirements depending on your circumstances, such as your credit score.

FHA loans usually require a debt-to-income ratio of 43% or less, but different factors may affect this, such as a high credit score or high home equity.

As mentioned, your current mortgage does not have to be an FHA loan to qualify for an FHA cash-out refinance.

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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.

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Get Professional Help Exploring Options

Foreclosure is a stress-filled situation no homeowner wants any part of, but unexpected financial setbacks happen to some of us and it helps to know where to go for assistance.

The first stop always should be your lender. They dont want to foreclose on you. It costs them far more to foreclose a home than to work with the consumer on finding an affordable mortgage payment. Ask them for assistance and you will be surprised at how willing they are to keep you in the home.

If that doesnt work, research the many programs offered by the Housing and Urban Development, the federal agency that oversees housing issues in the United States.

Beyond that, consider a HUD-approved nonprofit credit counseling agency is another source of help for mortgage and housing counseling. They can look at your income and expenses and offer suggestions that could create enough room in your budget to make payments on your mortgage.

In short, there are ways to deal with foreclosure.

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Emergency Rescue Mortgage Assistance

PROGRAM OVERVIEW:

• Up to $35,000 per household for expenses which may include:
• Mortgage reinstatement
• Municipal or property tax liens
• Mortgage payments, including principal, interest, taxes, and homeowners insurance

ELIGIBILITY:

• To qualify for assistance, a homeowner must:
• Own and occupy an eligible one- to four- unit primary residence
• Have experienced a COVID-19 related financial hardship, and have been unableto remain current on mortgage payments
• Meet household income limits
• Have been current on mortgage and property taxes as of January 2020

How To Know If You Are Eligible For The Mortgage Relief 2020

Most homeowners qualify for a mortgage relief, otherwise known as forbearance, due to the global COVD-19 financial hardship. The institutions listed above cover the majority of the loans. However, if you are not sure whether your loan falls under any of these categories, you can always find out through the following ways:

• Contact your mortgage servicer-you can call or write to your mortgage for inquiries. Typically, the servicer should provide all your mortgage lenders contact information. This information is usually listed on the statement.
• Search online- there are helpful loan lookup tools for loans from Fannie Mae or Freddie Mac providers.
• Search on the Mortgage Electronic Registration Systems- THE MERS is a repository or website that contains the database of all registered mortgage loans. Therefore, it is a go-to if you dont know your provider.

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