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By Miriam Raftery
Photo: CC-NC-SA via Bing
February 16, 2023 (Washington D.C.) - To help homeowners during this time of rising interest rates, the FHA has announced that its programs to help homeowners impacted by COVID-19 has been extended to help ALL eligible borrowers who are struggling to avoid foreclosure, regardless of the reason for their hardship. These tools will be available for at least the next 18 months.
During the COVID-19 pandemic, over 2 million homeowners were able to stay in their homes thanks to programs that allowed them to obtain loan modications or forbearances.
“Although the pandemic has ended, the economic effects will remain a challenge for the foreseeable future,” said HUD Secretary Marcia L. Fudge. “These impactful and effective foreclosure prevention tools will help struggling borrowers find the right option to help them get back on their feet and keep them in their homes. These tools have been so successful already, which is why FHA worked to enhance them further and include more borrowers.”
Included in these new enhancements are updates that also increase the limit on the amount of interest-free payments on loan amounts in arears that borrowers can pay at the end of their mortgage term to help maximize the number of borrowers able to retain their homes despite higher interest rates. The mandatory effective date of the changes is April 30, 2023, but mortgage servicers may begin offering these options to borrowers immediately.
In the last two years, FHA has helped 1,845,000 mortgage holders enter into an agreement with their mortgage servicer to have their mortgage payments paused or reduced (forbearance) due to Covid-19. Additionally, 1.2 million (most of whom obtained this help after a forbearance) were able to resume payments and put any arrearages at the end of their mortgage, or obtain a loan modification that reduced their payment to avoid foreclosure.
Currently, there are another 58,000 borrowers working with their servicer to finalize an option to avoid foreclosure. For borrowers of color specifically, FHA helped 800,000 individuals and families of color through forbearance, and almost 550,000 through a loss mitigation option.
To see a breakdown of forbearance and loss mitigation by state, visit this fact sheet.
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