With a moratorium on foreclosures ending July 31 a new White House policy aims to counter a wave of dispossessed homes by reducing monthly premiums by 25% for borrowers struggling to repay their federally guaranteed mortgages. Here’s what you need to know to get this discount—whether or not you are currently in mortgage forbearance.
How does the new policy work?
Under the CARES Act, a borrower in financial difficulty due to COVID-19 qualifies for forbearance — a interest free break on payments—On their federally guaranteed mortgage, up to 360 days (or six months, July 1). This includes borrowers who have their federal loans backed by the Federal Housing Administration, the US Department of Veterans Affairs, and the US Department of Agriculture.
Since many homeowners will exit forbearance after the July 30 foreclosure ban expires, the Biden administration is offering an option to reduce monthly premiums by 25%, in exchange for a longer term at determine by your lender. As Isaac Boltansky, director of policy research at Compass Point Research & Trading, explain to the Wall Street newspaper: “If a reduction in monthly costs keeps this borrower at home until he gets back on his feet, then it’s a victory for the borrower, the policymakers and Uncle Sam because he owns the risk.” credit.
Also note that the reduced rate of 25% is not your only relief option if you get out of forbearance. You can also participate in a repayment plan, or request a deferral or a partial claim on your mortgage (for more details on these options, check out this CNET article).
According to a White House fact sheet, the owners who are always “looking for a job, a professional retraining, have difficulty catching up with their tax and insurance delays, or continue to experience difficulties for another reason”, when they leave abstentions are eligible. To qualify, all you need to do is contact your lender directly and be able to prove economic hardship.
How to apply for abstention
If you haven’t yet applied for forbearance, you can still do so and buy yourself a six-month break on mortgage payments, provided you apply. before seven. 30, when the program expires. To do this, you will need to contact your lender directly and apply. Check this out too Consumer Financial Protection Bureau page, which has great advice on what to ask for when making the request.