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With a moratorium on foreclosures ending July 31, a new White House policy aims to fend off a wave of dispossessed homes by lowering monthly premiums by 25% for borrowers struggling to pay off their government-secured mortgages. Here’s what you need to know in order to get that discount whether or not you are currently on the mortgage loan.
How does the new policy work?
Under the CARES Act, a borrower who is in financial distress due to COVID-19 is entitled to deferral – and interest-free payment break– for your government-secured mortgage loan for up to 360 days (or six months, As of July 1st. This includes borrowers whose federal loans are secured by either the Federal Housing Administration, the US Department of Veterans Affairs, and the US Department of Agriculture.
Since many homeowners will be indulgent once the foreclosure ban expires on July 30th, the Biden administration offers the option to lower monthly premiums by 25% in exchange for a longer term set by your lender. As Isaac Boltansky, Director of Policy Research at Compass Point Research & Trading, explained to the Wall Street Journal: “If a reduction in monthly costs helps keep the borrower in their house until they get back on their feet, then it is a win for the borrower, policymakers and Uncle Sam as he bears the credit risk.”
Also note that the reduced rate of 25% is not your only means of relief if you leave indulgence. You can also participate in a repayment schedule or request a deferral or partial claim on your mortgage (see for more information on these options check out this CNET article).
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According to a White House factsheet, Homeowners who are still “looking for a job, retraining, having difficulties catching up on taxes and insurance or for other reasons” when they leave the deferral. To qualify, all you need to do is contact your lender directly and provide evidence of economic distress.
How to apply for a cease and desist motion
If you haven’t applied for an injunction, you can still do so and afford a six month hiatus in mortgage payments, as long as you apply before September 30th when the program expires. To do this, you need to contact your lender directly and apply. Check that out too Consumer Protection Agency pagewhich has some great tips on what to ask for when you make the inquiry.
