Biden extends protections for owners. What you should know
Historic row houses in the Colombia Heights neighborhood of Washington DC, USA
amedved | iStock | Getty Images
Homeowners struggling under the coronavirus pandemic received some welcome news Tuesday. The Biden government announced that it will extend its anti-forbearance and foreclosure programs.
The White House said the move will benefit the 2.7 million homeowners currently in Covid and expand the availability of forbearance options on around 11 million other government-supported mortgages across the country.
“Since the crisis is going on much longer than expected, it is only appropriate to expand what we know of,” said Sarah Gerecke, associate professor of planning at New York University. Many of these support options should expire next month.
Do you have any questions about the new protective measures? Here are some answers.
Does my mortgage qualify for the new protection?
Federal government-covered mortgages, or approximately 70% of borrowers, are entitled to additional leniency and protection from foreclosure.
Specifically, if you have a home loan through the Federal Housing Administration, the US Department of Agriculture, or the US Department of Veterans, you can sign up for an indulgence by June 30th. If you have a Fannie Mae or Freddie Mac mortgage you are also able to delay your payments.
“The easiest way to find out if you are eligible, and to apply for payment facilities if necessary, is to contact your lender,” said Greg McBride, financial analyst at Bankrate.com.
Not sure who your lender is? The Consumer Financial Protection Bureau has a guide to help you find out.
How long can I be indulgent?
Some people may be indulgent for up to 18 months as the first stimulus package passed in March, the CARES Act, gave homeowners two 180-day relief periods and the Biden government now gives them two additional three-month breaks.
However, the rules vary depending on what type of government-secured loan you have.
If your mortgage is from Fannie Mae or Freddie Mac, you can delay your payments for up to 15 months. But you have to sign up with your lender by the end of February, said Alys Cohen, an attorney with the National Consumer Law Center.
If your home loan is through the Federal Housing Administration, the Department of Agriculture, or the Department of Veterans, you can delay your payments for 18 months as long as you do so by the end of June.
How do I beg your forbearance?
Do I need to provide evidence that I qualify for Forbearance?
McBride said the high paperwork requirements prevented many homeowners from getting relief during the 2008 crisis.
Fortunately, during the pandemic, all you need to do is confirm that you have suffered financial hardship. No documentation should be needed.
Do I have to do something if I’m already in Forbearance?
Yes. Your forbearance is not automatically renewed. And although these breaks last up to 15 months or 18 months, they sometimes occur at six month or three month intervals.
If you need more time, you have to call your lender and ask for it.
How will my missed payments be calculated?
Fortunately, if you qualify for Forbearance, you don’t have to make a flat-rate payment of your payments at the end of the discharge period. (Though, if you’re one of the 30% of homeowners who don’t have a government-secured or guaranteed mortgage, you might be asked to.)
Instead, you can request that your payments be pinned to the end of your loan, McBride said.
For example, if you missed payments for 12 months, it will now take 31 years to repay a 30 year mortgage.
What if I am threatened with foreclosure?
If your mortgage is from Fannie Mae or Freddie Mac, you should be protected from foreclosure through the end of March.
If your home loan is made through the Federal Housing Administration, the Department of Agriculture, or the Department of Veterans, you will be safe by the end of June.
“”You will not be excluded during the moratorium unless you have vacated or given up your property, “said Sara Singhas, director of credit management at the Mortgage Bankers Association.
If you don’t have a government-secured mortgage or if you have home debts beyond your mortgage, including homeowners association fees or back taxes, you may still be at risk. People who live in prefabricated houses are also usually not protected from foreclosure.
If you are concerned about losing your home, speak to one of HUD’s housing counselors and contact your local law firm.
What if i’m concerned about payments resuming?
If you expect your ability to make your monthly mortgage payments to remain compromised beyond your grace period, you can ask your lender for a reduction, Cohen said.
Although a lower monthly payment can mean a longer loan term and more interest, many people can stay in their homes with this option. (If you are following this path, you will want to find out how your insurance and tax payments will affect you.)
I am a tenant. Does this offer me protection?
These new guidelines do not provide direct relief to tenants.
However, on his first day in office, Biden extended a ban on eviction for non-payment until March. A $ 25 billion rental assistance fund was also distributed among the states. Learn how to apply for cash in this story.
Correction: The Federal Housing Administration issues home loans. In a previous version, the agency name was incorrectly specified.