The pandemic placed a strain on the personal finances of many individuals. To help home owners who are still struggling to make their mortgage payments due to COVID-19, the Biden administration has announced new loan modification options for borrowers who have government-backed home loans.
Under the plan, those with Federal Housing Administration (FHA)-insured mortgages who have been financially impacted by the COVID-19 crisis will be eligible to receive up to a 25% reduction on their principal and interest (P&I) payments. In return, the life of their mortgage payments will be extended to allow for the lower monthly payments.
The COVID relief measures for borrowers with loans backed by the Department of Agriculture include up to a 20% reduction in monthly P&I payments. New options include an interest rate reduction, term extension and a mortgage recovery advance, which can help cover past-due mortgage payments and related costs. Borrowers will first be assessed for an interest rate reduction, and if additional relief is still needed, the borrowers will be considered for a combination rate reduction and term extension.
The Department of Veteran Affairs’ new COVID-19 Refund Modification provides multiple tools to assist certain borrowers in achieving a 20% reduction in the dollar amount for monthly P&I mortgage payments. In some cases, even larger reductions are possible.
Home owners can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections and key deadlines.