Biden Administration Announces Mortgage Relief as Foreclosure Moratorium Comes to an End

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In just a few days, on July 31, 2021, the national moratoriums on residential evictions and foreclosures are set to expire.  With this deadline fast approaching, the Biden administration announced a new mortgage relief plan[1] on July 23 to provide relief for individuals with federally-backed mortgages who might soon face the possibility of losing their homes.

The new program is aimed at reducing the monthly payments for individuals with qualifying mortgage loans.  Borrowers struggling to make their payments and facing foreclosure as the moratorium ends can negotiate a reduction in their mortgage payments up to 25% for mortgages backed by the Federal Housing Administration and up to 20% for mortgages from the Department of Veterans Affairs and U.S. Department of Agriculture.  Additionally, the relief plan allows for lower interest rates and an extension on the term of the loan in certain circumstances.  These new reductions are similar to the relief already in place for mortgages backed by Fannie Mae and Freddie Mac.

Funds from the Homeowner Assistance Fund that are allocated to states in order to prevent mortgage payment defaults may be used in conjunction with the new relief measures to provide additional assistance to borrowers or to provide assistance for those without federally-backed mortgages who are unable to take advantage of the new relief plan.

Under CFPB rules, mortgage servicers are required to discuss available relief options with their borrowers.  Thus, to take advantage of the relief, borrowers should contact their mortgage servicer to discuss any options that may be available.

 

[1] The White House, www.whitehouse.gov, July 23, 2021

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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