In fact, servicers must proactively solicit borrowers for loss mitigation and make affirmative efforts to cure a loan default. But if you can’t work out a solution to your mortgage delinquency, the foreclosure will go forward under state law—the same as any other foreclosure.
However, if the servicer failed to comply with HUD's loss mitigation guidelines, you might have a defense to the foreclosure.
FHA provides mortgage insurance to approved lenders, which offer FHA-backed (insured) mortgages to borrowers. Lenders can provide FHA loans to borrowers who otherwise might not qualify for a mortgage because the loans are less risky to the lender. FHA will cover the losses if the borrower defaults.
FHA lenders can offer borrowers good terms, including a low down payment—as low as 3.5% of the purchase price. This type of loan is often easier to qualify for than a conventional mortgage, and anyone can apply. Borrowers with a FICO credit score as low as around 500 might be eligible for an FHA loan.
But FHA loans have a maximum loan limit that varies depending on the average cost of housing in a given region.
With an FHA loan, borrowers must pay MIP (mortgage insurance premium) as part of the loan. (Conventional mortgages have PMI, while FHA loans have MIP.)
The premiums that borrowers pay contribute to the Mutual Mortgage Insurance Fund. FHA draws from this fund to pay lenders' claims when borrowers default.
Because FHA will likely lose money if you stop making your mortgage payments, the agency has established a process to help homeowners avoid foreclosure. Under HUD policy (FHA is part of HUD), in most cases, the servicer must review a borrower who has an FHA-insured loan and is behind in payments or about to fall behind, for loss mitigation options.
The servicer has to evaluate the borrower using a "waterfall," a series of steps, to determine which, if any, of the options listed below are appropriate.
During the waterfall process, the servicer must evaluate the borrower for loss mitigation alternatives in a specific order. Once a borrower is deemed eligible for a particular option, the evaluation stops. The process involves a complex string of calculations to determine which option, if any, is most appropriate for the borrower.
Waterfall options and priority. Under the waterfall, the servicer evaluates whether a borrower is eligible for one of the following options (generally in the following order):
Federal law provides time for the loss mitigation process before a foreclosure can start. Under federal law, most homeowners, including those with FHA loans, get 120 days to work out an alternative to foreclosure before the foreclosure begins. But if you can't work out one of the options above or another loss mitigation option, the foreclosure will start.
FHA loan foreclosures are generally the same as foreclosures of other types of loans. State law governs the process.
So, you’ll get whatever foreclosure notices your loan contract and state law requires.
If you need help dealing with your loan servicer, want more information about different ways to avoid foreclosure, or are seeking information about how to fight a foreclosure, consider talking to a foreclosure attorney.
A HUD-approved housing counselor is another valuable resource of information.
]]>As of April 30, 2023, loan servicers must evaluate all eligible borrowers with FHA-insured mortgages who are in default or facing imminent default using the COVID-19 loss mitigation waterfall process, regardless of the cause of the borrowers' financial difficulties. The COVID-19 loss mitigation waterfall temporarily replaces the general "FHA Waterfall Process" described below. These temporary options, which were previously scheduled to expire at the end of the COVID-19 national emergency, will be available through April 30, 2025.
Many courts have said that a servicer’s failure to comply with HUD guidelines provides a defense to a foreclosure.
In FHA's general waterfall process, the servicer usually, subject to a few exceptions, has to evaluate the borrower to determine which, if any, of the options below is appropriate to avoid foreclosure.
The servicer must evaluate the borrower for these loss mitigation alternatives in the following specific order:
Once a borrower is eligible for a particular option, the evaluation stops.
Under a "forbearance" plan, the borrower makes reduced payments or doesn't make any payments for a specific amount of time.
Informal forbearance. An "informal" forbearance plan is an oral agreement between the servicer and the borrower. The servicer (on the lender's behalf) agrees to let the borrower make reduced payments or to stop making payments for three months or less.
Formal forbearance. A "formal" forbearance plan is a written agreement allowing the borrower to make reduced payments or stop making payments for over three months but not more than six months unless HUD authorizes it.
FHA special forbearance for unemployed homeowners. HUD's "Special Forbearance-Unemployment" option is for borrowers who've become unemployed and can't continue to make their monthly mortgage payments.
The servicer will also evaluate whether the borrower has enough income for a repayment plan.
While the federal Home Affordable Modification Program (HAMP) and its associated programs expired at the end of 2016, FHA still calls its main loan modification program "FHA-HAMP." (However, FHA temporarily suspended its FHA-HAMP option through October 30, 2024.)
A "partial claim" is an interest-free loan from HUD to get caught up on overdue payments. After getting a partial claim, the borrower is supposed to resume making their regular monthly payments. The loan doesn't have to be repaid until the first mortgage is paid off, like when you sell the property.
Partial claims are sometimes completed along with a loan modification.
A "preforeclosure sale" (short sale) is when the borrower sells the home for less than the amount owed on the mortgage loan. After an FHA preforeclosure sale, the lender can't get a deficiency judgment.
With a "deed in lieu of foreclosure," the borrower voluntarily offers the home's deed to HUD in exchange for a release from all obligations under the mortgage. Following an FHA deed in lieu of foreclosure, the lender can't get a deficiency judgment.
An analysis for a deed in lieu of foreclosure is the end of the standard FHA loss mitigation waterfall.
FHA offers an expanded list of alternatives to help homeowners affected by the COVID-19 national emergency. So, the waterfall for borrowers affected by COVID-19 looks a little different.
Again, servicers must offer these options to all borrowers, including non-occupant borrowers, starting April 2023, no matter the cause of the borrowers' financial hardships.
The waterfall looks like this:
On June 25, 2021, HUD established the COVID-19 Advance Loan Modification (COVID-19 ALM). Under this modification program, eligible borrowers get a minimum 25% reduction of their monthly mortgage payment's principal and interest portion.
The program is automatic and is a pre-waterfall step: lenders must review eligible borrowers for this option and provide loan modification documents that will significantly reduce the borrowers' monthly payments. Borrowers don't need to contact their lender or servicer to get this modification.
To qualify, the property may be owner-occupied or non-owner-occupied, and the borrower must be 90 or more days delinquent. Borrowers who don't qualify for the COVID-19 ALM must be evaluated for the other COVID-19 loss mitigation options described below.
If the borrower indicates an ability to resume making their pre-hardship mortgage payment, say, after their existing COVID-19 forbearance ends, servicers must review the borrower for a COVID-19 Recovery Standalone Partial Claim.
Again, a partial claim is an interest-free loan from HUD that brings a first mortgage current by paying the overdue amounts. You don't have to repay the loan until the first mortgage is paid off, like when you sell the property. Sometimes, the servicer will complete a partial claim along with a modification.
The COVID-19 Recovery Standalone Partial Claim is limited to 30% of the borrower's unpaid principal balance.
Payment Supplement option. If you can't afford to resume making your regular payments after getting a partial claim, you might be eligible for FHA's Payment Supplement option. The partial claim can bring you current on your mortgage by paying off overdue amounts, and the Payment Supplement option uses remaining partial claim funds to pay some of your mortgage payment each month, reducing your monthly payment. This option can reduce your payments by as much as 25% for up to three years. Then, you go back to making your regular payments.
Lenders can offer the Payment Supplement starting May 1, 2024, and they must start offering it by January 1, 2025. Again, a partial claim can total up to 30% of your mortgage balance. So, you won't qualify for this option if you've already used up your partial claim allowance.
If the borrower can't afford the monthly payment amount and needs a loan modification, the servicer must evaluate the borrower for a COVID-19 Recovery Modification.
This kind of modification aims to reduce the principal and interest portion of the monthly mortgage payment by at least 25%. The COVID-19 Recovery Modification is a 360-month (30-year) or 480-month (40-year) modification and includes a partial claim, if available.
This modification is available to owner-occupied properties and properties that are not owner-occupied, like rental properties, secondary residences, and vacation homes.
You might be eligible for a preforeclosure sale (short sale) if you don't qualify for any previous options.
Or you might qualify for a deed in lieu of foreclosure.
To learn more about loss mitigation options for FHA-backed loans, see HUD's Loss Mitigation Services for FHA Homeowners website. You can also call the FHA Resource Center at 800-CALL FHA (800-225-5342), go to the online FHA Resource Center, or email the FHA Resource Center at answers@hud.gov.
Contact your loan servicer directly to learn what options are available in your particular situation. Be sure to mention you have an FHA-backed loan.
If you need help dealing with your loan servicer, want more information about different ways to avoid foreclosure, or are seeking information about how to fight a foreclosure, consider talking to a foreclosure attorney. Talking to a (free) HUD-approved housing counselor is also a good idea.
]]>In addition, FHA extended the availability of its COVID-19 mortgage relief options until April 30, 2025. These temporary COVID-19 options were previously set to expire when the COVID-19 national emergency ended on May 11, 2023.
Homeowners affected by COVID-19 were previously eligible for a COVID-19 forbearance. FHA says you had to request an initial COVID-19 forbearance from your mortgage servicer by May 31, 2023, and no COVID-19 forbearance period may extend beyond November 30, 2023.
If you don't qualify for a COVID-19 forbearance, you might be eligible for a different type of forbearance. During the forbearance period, the servicer can't add fees or penalties to your account or charge interest beyond the amounts scheduled or calculated as if you made all contractual payments on time and in full under the terms of the mortgage contract.
Following a forbearance, homeowners with FHA-insured loans can access several loss mitigation alternatives through FHA’s “waterfall” process. Under the FHA's waterfall process, you can most likely avoid having to pay all of the overdue amounts right away when a forbearance ends.
In this process, the servicer must, subject to a few exceptions, evaluate the borrower to determine which, if any, of the below alternatives are appropriate. The servicer must evaluate the borrower for these options in a specific order. Once a borrower qualifies for a particular option, the evaluation concludes.
On June 25, 2021, HUD established the COVID-19 Advance Loan Modification (COVID-19 ALM). Under this modification program, eligible borrowers get a minimum 25% reduction of their monthly mortgage payment's principal and interest portion.
The program is automatic and is a pre-waterfall step: lenders must review eligible borrowers for this option and provide loan modification documents that will significantly reduce the borrowers' monthly payments. Borrowers don't need to contact their lender or servicer to get this modification.
To qualify, the property may be owner-occupied or non-owner-occupied, and the borrower must be 90 or more days delinquent. Borrowers who don't qualify for the COVID-19 ALM must be evaluated for the other COVID-19 loss mitigation options described below.
If the borrower indicates an ability to resume making their pre-hardship mortgage payment, say, after their existing COVID-19 forbearance ends, servicers must review the borrower for a COVID-19 Recovery Standalone Partial Claim.
A partial claim is an interest-free loan from HUD that brings a first mortgage current by paying the overdue amounts. You don’t have to repay the loan until the first mortgage is paid off, like when you sell the property. Sometimes, the servicer will complete a partial claim along with a modification.
The COVID-19 Recovery Standalone Partial Claim is limited to 30% of the borrower's unpaid principal balance.
If you can't afford to resume making your regular payments after getting a partial claim, you might qualify for FHA's Payment Supplement option.
With this option, the partial claim will initially bring you current on your mortgage by paying off overdue amounts and then uses remaining partial claim funds to cover part of your mortgage payment each month, lowering your monthly payments. This option can lower your payments by as much as 25% for as long as three years. Then, you go back to making your regular payments.
Lenders can offer the Payment Supplement starting May 1, 2024, and they must start offering it by January 1, 2025. You won't qualify for this option if you've already used up your partial claim allowance (30% of your mortgage balance).
If the borrower can't afford the monthly payment amount and needs a loan modification, the servicer must evaluate the borrower for a COVID-19 Recovery Modification. This modification aims to reduce the principal and interest portion of the monthly mortgage payment by at least 25%. The COVID-19 Recovery Modification is a 360-month or 480-month modification and includes a partial claim, if available.
This modification is available to owner-occupied properties and properties that are not owner-occupied, like rental properties, secondary residences, and vacation homes.
If you don't qualify for any of the previous options, you might be eligible for a "preforeclosure sale" (short sale). This is when the borrower sells the home for less than the outstanding loan balance. The lender can't get a deficiency judgment after an FHA preforeclosure sale.
Or you might qualify for a "deed in lieu of foreclosure." With this option, the borrower trades the home's deed to HUD in exchange for a release from all obligations under the mortgage. Like with a preforeclosure sale, the lender can't get a deficiency judgment after a deed in lieu.
The easiest way to find out what kind of loan you have is to call your loan servicer.
You could also look for an FHA case number on your mortgage contract. Sometimes, though, loans lose their FHA-insured status. Call your servicer or HUD’s National Servicing Center at 877-622-8525 if you have questions about your loan's status.
You can also check your billing statement to see if you pay a mortgage insurance premium (MIP). "MIP" is what FHA calls its mortgage insurance. If you’re paying MIP, then you have an FHA-insured loan.
To learn more about loss mitigation options for FHA-backed loans, see HUD's Loss Mitigation Services for FHA Homeowners website. You can also call the FHA Resource Center at 800-CALL FHA (800-225-5342), go to the online FHA Resource Center, or email the FHA Resource Center at answers@hud.gov.
To learn about different ways to avoid a foreclosure, consider talking to a (free) HUD-approved housing counselor. A housing counselor can help you understand the options available if FHA insures your loan or another entity owns or guarantees your home loan. You can also call your servicer to learn about available relief.
Talk to a foreclosure attorney to learn about foreclosure laws and procedures in your state, including how long the process takes.
If you don’t have an FHA-insured loan, most servicers (on behalf of the loan owner) offer various alternatives to help homeowners, like forbearance agreements and modifications.
]]>The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), offers protections and options to homeowners who've been affected by COVID-19 and are facing foreclosure.
Under a HUD directive, loan servicers have to evaluate borrowers with FHA-insured loans for a COVID-19 Advance Loan Modification (COVID-19 ALM) if the loan is 90 or more days delinquent. .
Under the COVID-19 ALM program, eligible borrowers get a minimum 25% reduction in their monthly mortgage payment's principal and interest portion.
The COVID-19 ALM program is automatic: servicers must review eligible borrowers for this option and provide loan modification documents that will significantly reduce the borrowers' monthly payments. Borrowers don't need to contact their lender or servicer to get this modification.
To qualify, the property may be owner-occupied or non-owner occupied, and the borrower must be 90 or more days delinquent.
If eligible, the servicer must prepare and send loan modification documents to the borrower, along with a cover letter that includes:
Servicers have to evaluate all borrowers on a COVID-19 forbearance for a COVID-19 ALM within 30 days of a forbearance expiring.
To learn more about loss mitigation options for FHA-backed loans, see HUD's Loss Mitigation Services for FHA Homeowners website. You may also call the FHA Resource Center at 800-CALL FHA (800-225-5342), go to the online FHA Resource Center, or email the FHA Resource Center at answers@hud.gov.
Contact your loan servicer directly to learn what options are available in your particular situation. Be sure to mention you have an FHA-backed loan.
If you need help dealing with your loan servicer, want more information about different ways to avoid foreclosure, or are seeking information about how to fight a foreclosure, consider talking to a foreclosure attorney. Talking to a (free) HUD-approved housing counselor is also a good idea.
]]>Under these programs, homeowners suffering financial hardships due to COVID-19 can get financial assistance to make mortgage payments, pay for utility and internet services, and cover other expenses, like property taxes and homeowners' insurance, so they can prevent a mortgage delinquency, default, or foreclosure.
Most Homeowner Assistance Fund programs will continue until the earlier of sometime in 2025 or 2026, or when all of the funds allotted to the program have been exhausted. Many states plan to use all their funds well before this time. So, if you think you might qualify for assistance under a particular program, it's best to apply as soon as possible.
]]>Thousands of mortgage borrowers with VA-guaranteed loans affected by the COVID-19 pandemic have received COVID-19 forbearances. These forbearances allow borrowers to forgo making loan payments for up to a year, sometimes longer. But it's important to note that a forbearance isn't the same as loan forgiveness; borrowers still owe the amounts they skipped paying after their forbearance ends.
To help borrowers catch up on their overdue amounts, the U.S. Department of Veterans Affairs (VA) has issued a final rule creating a “partial claim” program. As of July 27, 2021, this option allows homeowners to resume making their regular monthly mortgage payments without first having to get current on the payments that were missed during a forbearance.
The new “partial claim” option allows loan servicers to offer 0%-interest loans to VA-guaranteed borrowers to bring their overdue loans current. The partial claim is recorded as a second mortgage lien on the home. This loan comes due only at the end of the first mortgage loan, like at the first mortgage's maturity, after a refinance, or when you sell the property. The borrower doesn’t have to make any payments on the partial claim loan until then.
After the VA pays the partial claim to the loan holder, the borrower resumes making the regular monthly mortgage payments in the same amount as before getting a COVID-19 forbearance.
VA-guaranteed borrowers exiting their COVID-19 forbearance plans who were current or less than 30 days delinquent as of March 1, 2020, or whose loan originated on or after March 1, 2020, are eligible for a partial claim. The borrower must also currently occupy the property securing the guaranteed loan as a principal residence.
Borrowers have to indicate to their mortgage servicer that they can resume paying their previous monthly payment amount. And the partial claim loan amount can’t be more than 30% of the first mortgage's unpaid principal balance.
This program is available from July 27, 2021 through October 28, 2022. To find out if you qualify, call your loan servicer.
If you can’t afford to make the regular mortgage payment that you paid before entering a COVID-19 forbearance, you might qualify for a:
If you have a VA-guaranteed or direct loan, the VA can get involved in your case, especially if you contact the nearest VA Regional Loan Center and ask for assistance. In some cases, the VA can provide a technician who can intervene with the servicer on your behalf, help you explore all options to avoid foreclosure, and conduct financial counseling with you. Contact a VA loan technician at 877-827-3702, Monday through Friday, from 8:00 am to 6:00 pm EST.
If the servicer fails to meet VA requirements or its obligations under state or federal law, you might have a defense to a foreclosure. If you have additional questions about how foreclosure works or want information about how to fight a foreclosure in court, consider talking to a foreclosure attorney.
Also, a HUD-approved housing counselor is another helpful resource for information, particularly regarding different loss mitigation options.
]]>Initially, the CFPB had proposed a moratorium on foreclosures until 2022, but an outright ban wasn’t included as part of the final rule. But in most cases, the rule effectively prohibited servicers from starting foreclosures before January 1, 2022.
The foreclosure protections discussed in this article apply to foreclosures from August 31, 2021 through December 31, 2021.
Under federal mortgage servicing laws, a servicer generally can’t initiate a foreclosure until the borrower is more than 120 days delinquent. (12 C.F.R. § 1024.41(f)(1)(i)).
And, if you submit a complete loss mitigation application before a foreclosure starts, the servicer must hold off on starting a foreclosure until it reviews the application and:
While federal law already prohibits a servicer from beginning a foreclosure until the borrower is more than 120 days delinquent, the CFPB rule provided more protection to borrowers affected by the COVID pandemic.
From August 31, 2021 through December 31, 2021, unless an exception applied, a loan servicer could start a foreclosure only if the borrower was over 120 days behind on their mortgage payments and:
The rule applied to borrowers with a “COVID-19-related hardship,” which was defined as “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic declared in Proclamation 9994 on March 13, 2020 (beginning on March 1, 2020) and continued on February 24, 2021, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C.1622(d)).”
The rule didn’t apply to non-primary residences or small mortgage servicers. The protections also didn't apply if the borrower was more than 120 days delinquent before March 1, 2020, or the applicable statute of limitations would expire before January 1, 2022.
Another rule added temporary early intervention live contact requirements because of the COVID-19 pandemic. The requirements included:
This rule expired on October 1, 2022.
If you’re behind on your mortgage payments because of COVID-19 or another reason, your options depend on what entity, like the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), USDA, Fannie Mae, or Freddie Mac, owns or guarantees your loan.
You most likely have several alternatives. For example, you might qualify for a loan modification.
If you're facing a foreclosure, look into your options as soon as possible. Don't wait to ask for help. Contact a HUD-approved housing counselor who can tell you about different foreclosure avoidance options and will help you for free.
Also, consider talking to a foreclosure attorney to learn more about your state's foreclosure procedures and what you should do in your situation.
]]>The lender tacks the cost of the insurance on to your mortgage payment each month. But in certain circumstances, you can cancel the PMI, thereby reducing your monthly mortgage payments.
In most cases, PMI can be cancelled once you have 20% equity in your home and if you meet specific requirements. Under federal law, the lender has to let you know at closing how long it will take for you to get to a loan-to-value (LTV) ratio of 80% (that is, 20% equity).
Even if you don’t ask the servicer to cancel your PMI, the lender must cancel it automatically when the LTV ratio is 78%.
If you have a Fannie Mae or Freddie Mac loan, one requirement for canceling PMI is that you must have an acceptable payment record. An “acceptable payment record” means no payment 30 days or more past due in the last 12 months and no payment 60 days or more past due in the previous 24 months.
On December 9, 2020, Fannie Mae and Freddie Mac addressed borrower-requested PMI termination during the COVID crisis in Lender Letter 2020-02 and Bulletin 2020-46. If you’re otherwise eligible to cancel PMI for your loan, a couple of late payments due to COVID-19 probably won’t cause an issue if you received mortgage relief.
For Fannie Mae loans, when looking at whether you have an acceptable payment record, the loan servicer can’t consider any payment that’s 30 or more days past due in the last 12 months or 60 or more days past due over the previous 24 months that’s attributable to a COVID-19 financial hardship and if the servicer provided you with:
But you must be current on the mortgage loan when requesting the PMI termination.
This temporary policy change is effective for borrower-initiated requests for termination initiated through Fannie Mae’s servicing solutions system on or after March 1, 2021.
For Freddie Mac loans, if you ask to cancel the mortgage insurance after the loan has been brought current following the conclusion of a COVID-19-related hardship, your payment history has to comply with all of the following requirements:
Both Fannie Mae and Freddie Mac’s guidelines for canceling PMI apply if the request to cancel is based on the original or current home value.
To learn more about Fannie Mae, visit fanniemae.com. To find out if Fannie Mae owns your mortgage loan, go to https://www.knowyouroptions.com/loanlookup or call 800-2Fannie (800-232-6643).
For more information about Freddie Mac and how it works, go to the Freddie Mac website. To find out if Freddie Mac owns your mortgage loan, use Freddie Mac's Loan Lookup tool.
]]>SBA disaster assistance is disbursed in the form of loans, not grants. So, borrowers must agree to pay the money back. For some SBA disaster loans, borrowers have to provide collateral for the loan. (13 C.F.R. § 123.11).
If you put up real estate, such as your home, to secure the loan and later default, like by failing to make the payments, the lender might foreclose.
The SBA provides low-interest, fixed-rate loans to homeowners, renters, nonprofit organizations, and business owners to help rebuild a home, replace belongings, or repair a business, among other things, after a natural disaster.
You can use disaster loan proceeds for restoring or replacing your primary home, including a mobile home used as a primary residence, your personal property, or business property. (13 C.F.R. § 123.7).
The loan money can also be put toward bringing the property as close as possible to its pre-disaster condition, and within certain limits, to protect damaged or destroyed real property from potential future similar disasters. (13 C.F.R. § 123.7).
The SBA might issue the disaster loan itself, or the loan might come from a participating lender. If you get your loan directly from the SBA, then the SBA will service (manage) the loan. But if you take out the loan from a participating lender, that lender is responsible for servicing your loan. (13 C.F.R. § 123.16).
Go to the U.S. Small Business Administration website to apply for an SBA disaster loan. This site provides disaster loan application instructions and details about SBA disaster loan requirements.
Submitting an online application is the quickest way to get a decision about loan eligibility, but you may also apply via mail or in person at any Disaster Recovery Center. For more information or to find a Disaster Recovery Center near you, contact the SBA Customer Service Center at 800-659-2955 or send an e-mail to disastercustomerservice@sba.gov.
While each situation is a little different, here’s generally what happens if you don’t make the payments for your SBA disaster loan.
Once you fall behind in your SBA disaster loan payments, you’ll be subject to late fees and perhaps some other charges. You'll likely receive phone calls and letters advising you to get caught up on the loan.
SBA servicing guidelines say that an alternative to foreclosure should be negotiated whenever possible, and many different options are available. So, contact your lender or the SBA, depending on who services the loan, as soon as you think you might miss a payment.
You could be able to work out a loss mitigation option (see below). And the sooner you ask for help, the more alternatives will be available to you.
Because the lender wants you to repay what you owe, rather than foreclose, you most likely have different ways to get caught up on what you owe.
A payment forbearance or loan restructuring might be possible. If you’re unable to make your SBA loan installments in a timely manner for reasons that are substantially beyond your control, you may ask that the SBA suspend your loan payments or extend the loan maturity date, or both, to give you some relief. (13 C.F.R. § 123.16).
You might be eligible for another option. Also, under SBA servicing guidelines, if you’re facing a severe hardship, you might be able to get (for example) a deferment of past or future payments of principal, interest, or both for a stated amount of time. Or you might be able to get a reduction in the interest rate, payment amount, or frequency of payments.
Also, consider an “offer in compromise.” Another potential option is an "offer in compromise" where the borrower offers to pay less than what's owed to satisfy the debt fully.
As part of getting the loan, you might have put up your home or other real property as collateral. After a loan default, the lender has the right to foreclose and sell the property at a foreclosure sale to get some or all of their money back.
So, if you default on the payments for a disaster loan that's secured by your home or other real estate and don't work out a way to clear up the delinquent debt, the lender could potentially foreclose.
A foreclosure will be either judicial or nonjudicial, depending on state law and whether or not the mortgage contract has a provision granting a power of sale.
Going through a foreclosure will impact your credit scores. FICO credit scores, the most common type of credit scores, have a 300 to 850 range. Your scores will probably go down by at least 100 points or so after a foreclosure.
But exactly how much a foreclosure impacts a person’s credit scores varies from one borrower to the next. Generally, how much your scores will fall will depend to a large degree on your scores before the foreclosure. (And keep in mind that missing your payments will also drop your scores.)
The drop is more severe if you had very high credit scores before a foreclosure. If you already have low credit scores, a foreclosure will have less of an effect.
If the SBA chooses not to foreclose, it could potentially sue you for a money judgment.
If you’re facing a possible foreclosure due to nonpayment on an SBA disaster loan, contact the SBA or your lender, depending on who services the loan, to discuss loss mitigation options.
If you're facing a potential foreclosure and have questions about the process, want to fight the foreclosure, or need to learn how to avoid foreclosure, consider talking to a foreclosure attorney.
For more information about SBA disaster loans, go to SBA.gov, and search for “Disaster Assistance.” To learn more about other available disaster programs, go to DisasterAssistance.gov.
]]>These GSEs are privately owned, but they get support from the federal government. Fannie Mae and Freddie Mac play a significant role in the mortgage market by owning or guaranteeing many home loans in the United States.
And if you have a Fannie Mae or Freddie Mac loan and you're facing a foreclosure, you get access to specific mortgage-relief programs and foreclosure avoidance options.
Fannie Mae and Freddie Mac are nicknames for the GSEs, derived from their full names. Fannie Mae comes from Federal National Mortgage Association (FNMA) and Freddie Mac from Federal Home Loan Mortgage Corporation (FHLMC).
Fannie Mae and Freddie Mac provide stable funding for the housing and mortgage markets, but they don’t make loans directly to home buyers. They also don’t service mortgage loans.
Instead, the GSEs support the nation’s housing finance system by purchasing or guaranteeing home mortgages through the secondary mortgage market. Fannie Mae and Freddie Mac compete with each other as investors on the secondary mortgage market.
One difference between Fannie Mae and Freddie Mac is their original purpose. Congress created Fannie Mae in 1938 to provide affordable housing after the Great Depression. Banks didn’t have the funds to make mortgage loans, so Fannie Mae helped banks finance long-term, fixed-rate mortgages.
In 1968, the government privatized Fannie Mae. In 1970, Congress created Freddie Mac to compete with Fannie Mae’s monopoly and further expand the secondary mortgage market.
Some other differences are that Fannie Mae and Freddie Mac have different loan programs and lending guidelines for borrowers. They also have various options for borrowers having trouble making their mortgage payments. Though, their loss mitigation options tend to be similar.
Also, Fannie Mae and Freddie Mac buy mortgages from different sources. Fannie Mae purchases loans from larger, commercial banks and lenders. Freddie Mac gets them from smaller banks and lenders.
Fannie Mae and Freddie Mac are similar in that they support the mortgage in the U.S. by purchasing mortgage loans from lenders that originate them.
And the Federal Housing Finance Agency (FHFA) regulates both Fannie Mae and Freddie Mac.
After purchasing loans from banks and mortgage companies, the GSEs either hold the mortgages in their portfolios or aggregate (pool) them into debt securities called mortgage-backed securities, which are then sold to investors. This process is called “securitization.”
Fannie Mae and Freddie Mac often guarantee payment of principal and interest on their mortgage-backed securities in exchange for a fee to reduce the investors' risk. By guaranteeing the loan, the GSEs agree to pay the investor even if the borrower defaults.
So, investors don’t have to worry about credit risk, making Fannie-backed and Freddie-backed mortgages a particularly appealing investment. Also, because of their major role in the mortgage market and their affiliation with the government, investors generally assume the government implicitly guarantees Fannie Mae and Freddie Mac loans (meaning, the government will bail out Fannie Mae and Freddie Mac if necessary.)
In fact, when the mortgage crisis began in 2007, Fannie Mae and Freddie Mac faced major losses. And because they had such a large share of owned and guaranteed loans in the country, the FHFA determined that the GSEs would soon become insolvent. So, in 2008, the FHFA put Fannie Mae and Freddie Mac into conservatorship. Fannie Mae and Freddie Mac received a bailout of nearly $190 billion from the government, which they've paid back. But they're still in conservatorship.
Because Fannie Mae and Freddie Mac continually purchase mortgages from banks and mortgage companies, lenders have a steady cash source to keep making loans to new borrowers. Lenders are also incentivized to offer non-risky loan products, like long-term, fixed-rate mortgages, because they know Fannie Mae and Freddie Mac will probably buy them.
If you have a Fannie Mae or Freddie Mac loan, are having trouble paying your mortgage, or are facing a foreclosure, various workout options are potentially available.
One possibility is a Flex Modification, a unique loan modification program for borrowers with GSE-owned loans. The Flex Modification program generally lowers an eligible borrower’s mortgage payment by around 20%. If you previously received a COVID-19 forbearance, you can access different repayment options, like Flex modifications and other kinds of modifications, when the forbearance expires.
Another option for borrowers facing financial hardship is a six-month payment deferral. On March 29, 2023, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, announced that the payment deferral policies established during the COVID-19 pandemic would continue to be available for borrowers, subject to some adjustments.
With a payment deferral option, borrowers keep the same monthly mortgage payment and move the past-due amounts to the end of the loan as a non-interest bearing balance, which becomes due and payable at maturity, sale, refinance, or payoff. To qualify, you must have resolved a temporary hardship and resumed your monthly contractual payments but can't afford either a reinstatement or repayment plan to bring the mortgage loan current. A regular payment deferral option is available if the mortgage loan is a couple of months overdue. A disaster payment deferral option helps borrowers with a disaster-related hardship return their mortgage to a current status after up to 12 months of missed payments.
Fannie Mae and Freddie Mac offer mortgage loans for borrowers who earn lower or moderate incomes.
For example, Fannie Mae has the HomeReady mortgage. It also lists homes it has acquired through foreclosure or deeds in lieu of foreclosure and offers them online for sale at a discount at www.HomePath.FannieMae.com. Freddie Mac has the Home Possible mortgage and HomeSteps.com for finding properties.
While Freddie Mac and Fannie Mae are shareholder-owned, they’ve both been under government conservatorship since the Great Recession.
Currently, Fannie Mae and Freddie Mac own or back most of the mortgage loans in the United States, which probably isn’t sustainable for the long run, given the financial risk to the government. Private investors will probably have to start assuming more risk in the secondary mortgage market at some point.
Go to Fannie Mae's Know Your Options website to learn more about Flex Modifications and other workout options for borrowers with Fannie Mae loans. To find out if Fannie Mae owns your mortgage loan, go to https://www.knowyouroptions.com/loanlookup or call 800-2Fannie (800-232-6643).
For more information about Freddie Mac and how it works, go to the Freddie Mac website. To find out if Freddie Mac owns your mortgage loan, use Freddie Mac's Loan Lookup tool.
If you’re behind in your mortgage payments—or think you soon will be—and want to learn about different ways to avoid a foreclosure, consider contacting a HUD-approved housing counselor. A housing counselor can help you understand the specific options available to you, whether Fannie Mae, Freddie Mac, or another entity owns your home loan.
You can also call your loan servicer to learn about different options to avoid foreclosure. If you want to learn about foreclosure procedures in your state, including how long the process takes, talk to a foreclosure lawyer.
]]>If you're an active servicemember, a veteran, or a surviving spouse with a VA-guaranteed or direct mortgage loan and struggling to make your mortgage payments, you might have access to special programs, including loan modification and refinancing options.
Also, you can get free counseling if you're facing foreclosure.
Veterans struggling to make mortgage payments on a VA loan might be able to avoid foreclosure by:
Mortgage assistance programs for veterans also include completing a compromise sale (a short sale) or a deed in lieu of foreclosure.
A VA streamline refinance is officially known as an "Interest Rate Reduction Refinance Loan" (IRRRL). An IRRRL is a VA-guaranteed loan that lowers your interest rate, decreasing the monthly principal and interest payments.
If you have an existing VA-guaranteed loan, you can apply for an IRRRL. The IRRRL must be in a first-lien position, so if you have a second mortgage, that lien holder must agree to subordinate its loan.
An IRRRL will reuse the entitlement you originally used. (VA loan entitlement is the amount for which the VA will guarantee a loan. Most lenders will lend up to four times the amount of the total entitlement. The basic entitlement available to an eligible veteran is $36,000.)
Example. Say your existing VA loan was initially made for $110,000 with a guaranty of $27,500, or 25%. The new IRRRL is for $112,000. The guaranty on the new loan is $28,000 or 25%, but your entitlement use is still $27,500.
In other words, an IRRRL is a VA-to-VA refinance that reuses the veteran-applicant's entitlement.
Generally, an IRRRL doesn't require an appraisal, credit information, or underwriting. So, you can refinance an underwater home. The basis for the loan is the existing VA loan, not the property's current market value.
Additionally, you don’t have to currently occupy the property to qualify for an IRRRL. But it might be easier to get approved if you live there. You do need to certify that you previously occupied the home, though.
Veterans using the VA Home Loan Guaranty benefit generally must pay a funding fee. The funding fee is a percentage of the loan amount, which varies based on the type of loan and your military category, as well as if you’re a first-time or subsequent loan user and whether you make a down payment.
You don’t have to pay the fee if you are:
The IRRRL can be completed with no money out of pocket by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs. The funding fee can be paid in cash at closing or added to the new loan.
Loan proceeds may only be applied to paying off the existing VA loan and the costs of obtaining or closing the IRRRL. You can’t get any cash out from the loan proceeds. To learn more about an IRRRL, visit the U.S. Department of Veterans Affairs website.
Loss mitigation options are also available to help veterans avoid foreclosure on delinquent loans. The main options for VA loans are:
If the servicer fails to exhaust the alternatives discussed here, contact one of the VA Regional Loan Centers.
If you'd like to sell your home, this option lets you delay a foreclosure sale so you have time to complete a sale.
If you’re having trouble paying your mortgage and facing foreclosure, the VA has the discretionary authority to purchase the loan from a private lender and take over the servicing of that loan. This process is called "refunding," which in this sense means “to fund again.” The VA will then work with you to avoid foreclosure.
Refunding is rare. But if you’re in default on your mortgage payments and you can’t get a forbearance, repayment plan, or loan modification even though you can make the mortgage payments (or will have the ability to make them soon), you might qualify.
To find out about a potential refund, call your servicer. You can also contact a VA regional center to learn more.
In a "compromise sale," the homeowner sells the property to a third party for an amount insufficient to pay off the loan. The servicer releases the lien and waives the deficiency in exchange for the sale proceeds. (A "compromise sale" is what the VA calls a short sale.)
With a deed in lieu of foreclosure, the homeowner voluntarily transfers the property to the holder of the VA-guaranteed loan.
However, you should be aware that completing a compromise sale or a deed in lieu of foreclosure could result in a loss or reduction in your future home loan benefit.
Instead of selling your home for less than you owe or deeding it to the holder, you might be able to sell the property and have the buyer take over your mortgage loan.
Contact your loan servicer directly to learn what options are available in your particular situation. It's also a good idea to talk to a (free) HUD-approved housing counselor.
VA personnel also assist veterans who are having problems making their mortgage payments.
If you’re a veteran with a VA loan, the VA can provide a technician who can intervene with the servicer on your behalf and help you work with your servicer to explore all options to avoid foreclosure, as well as conduct financial counseling.
To find the nearest VA Regional Loan Center near you, go to the VA’s Regional Loan Center Contact Information website.
If you’re a veteran, but the VA doesn’t guarantee or service your loan, the VA doesn’t have the legal authority to intervene with the servicer on your behalf.
However, you can call your nearest Regional Loan Center to speak to a technician who can advise you on approaches to take with your servicer. Go to the Department of Veterans Affairs website for more information about what to do if you're struggling with your mortgage payments.
Get tips on what to do—and what not to do—if you're facing a foreclosure.
Learn about last-minute strategies to stop foreclosure.
Find out if foreclosures are on the rise.
]]>Private lenders, like banks and mortgage companies, make VA-guaranteed home loans. The U.S. Department of Veterans Affairs (VA) guarantees a portion of the loan so the lender can offer more favorable terms to the borrower and provide loans to people who otherwise might not qualify for a mortgage. VA-backed loans are less risky to the lender because VA will cover losses if the borrower defaults. (The VA also offers a limited direct loan program. With a VA direct home loan, the VA is the mortgage lender.)
If you have a VA loan and are delinquent in mortgage payments, VA foreclosure guidelines say the servicer should work with you to help you avoid foreclosure.
But if you can’t find a solution to the delinquency, the foreclosure will go forward with state law governing the process—no different than any other foreclosure.
The VA requires servicers to work with borrowers who are behind in payments to bring the loan current or avoid foreclosure whenever possible. Borrowers with VA loans can access special options unavailable to borrowers with other kinds of loans.
But if you can’t work something out, the foreclosure will begin.
Once a borrower fails to make a payment or multiple payments, the servicer has to attempt to contact the borrower by phone and mail and, in some cases, arrange a face-to-face meeting. (38 C.F.R. § 36.4350 (g), (h)).
The servicer's goal is to try to reach an agreement with the borrower to bring the loan current and discuss loss mitigation options (see below). (38 C.F.R. § 36.4350 (g), (h)). (Federal mortgage servicing laws also require the servicer to contact the borrower to attempt to resolve the delinquency.)
Under VA guidelines, in most cases, the servicer must send the borrower a letter within 30 days of the delinquency if the servicer can't make phone contact with the borrower. The letter should:
The servicer must send another letter about loss mitigation options within 45 or 75 days of the default, depending on the situation. (38 C.F.R. § 36.4350 (g)).
Also, depending on the circumstances, you might be entitled to protection against foreclosure under the federal Servicemembers Civil Relief Act or state law.
Under federal law, most homeowners, including those with VA loans, get 120 days to work out an alternative to foreclosure before the foreclosure can begin. But the foreclosure will start if you can't work out a loss mitigation option.
Once started, a VA loan foreclosure is the same as other foreclosures. State law governs the procedures. So, you’ll get whatever foreclosure notices your loan contract and state law requires.
However, the VA encourages servicers to continue loss mitigation efforts even after the foreclosure starts.
If you have a VA loan, there are several ways to avoid a foreclosure. A VA loan technician or housing counselor can help you determine the best option.
You can get financial counseling before and during the foreclosure process.
Under VA guidelines, the borrower generally gets the right to reinstate the loan and stop a foreclosure sale by paying all overdue payments, late charges, and foreclosure expenses. A few exceptions exist, though, like when state law precludes reinstatement. (38 C.F.R. § 36.4309 (h)).
The VA expects the servicer to exhaust all possible alternatives before pursuing foreclosure. The main loss mitigation options for borrowers with VA loans are:
A VA loan foreclosure, like other foreclosures, could result in serious consequences, including:
Learn more about mortgage assistance for veterans and ways to avoid foreclosure if you have a VA loan.
Get tips on what to do—and what not to do—if you're facing a foreclosure.
Find out if foreclosures are on the rise.
Again, if you’re a veteran with a VA-guaranteed or direct loan, the VA can get involved in your case, especially if you contact the nearest VA Regional Loan Center and ask for assistance. In some cases, the VA can provide a technician who can intervene with the servicer on your behalf, help you explore all options to avoid foreclosure, and conduct financial counseling with you. Contact a VA loan technician at 877-827-3702, Monday through Friday, from 8:00 am to 6:00 pm EST.
If the servicer fails to meet VA requirements or its obligations under state or federal law, you might have a defense to a foreclosure. If you have additional questions about how foreclosure works or want information about how to fight a foreclosure in court, consider talking to a foreclosure attorney.
Also, a HUD-approved housing counselor is another helpful resource for information, particularly regarding different loss mitigation options.
]]>A CARES Act forbearance, sometimes called a "COVID-19 forbearance," lasts 180 days (six months). Borrowers might be able to get an additional 180 days, sometimes more. The right to this type of forbearance applies to borrowers with federally backed mortgage loans living in properties designed for the occupancy of one to four families, like single-family homes.
To get a forbearance, you need to contact your loan servicer by the deadline and affirm that you've suffered a financial hardship due to the coronavirus national emergency. The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA) set their own deadlines for getting a forbearance.
The deadline to request a forbearance for a mortgage on a one- to four-unit home differs based on what governmental entity backs the loan.
Fannie Mae and Freddie Mac haven't issued any guidance giving a deadline to request an initial forbearance. The latest guidance from Fannie Mae (Lender Letter LL-2020-02) says that its forbearance policies are "effective immediately and are effective until Fannie Mae provides further notice, unless otherwise stated." Similarly, Freddie Mac's issued Bulletin 2020-4 states that the forbearance plan guidelines announced in the bulletin are effective immediately. The bulletin also says, “Freddie Mac will continue to monitor the situation and may revise or revoke this temporary guidance at any time, as appropriate."
So, it's currently unclear exactly how long borrowers get to request forbearances for Fannie Mae and Freddie Mac mortgage loans. It’s reasonable to assume you may request a CARES Act forbearance until the coronavirus national emergency declaration expires on May 11, 2023.
Once the right to get a COVID-19 forbearance expires, be aware that Fannie Mae and Freddie Mac offer six-month forbearances (plus up to six additional months of forbearance in some cases) to borrowers who meet eligibility requirements.
The FHFA announced that borrowers with Fannie Mae and Freddie Mac-backed loans could extend their forbearances for another three months after the initial 180-day forbearance and 180-day extension expire. To get the forbearance extension, borrowers must have a COVID-19 forbearance plan in place on or before February 28, 2021, and other limits might apply.
In addition, a COVID-19 payment deferral can cover missed payments. With a deferral, borrowers repay the skipped payments when the home is sold, refinanced, or at mortgage maturity.
Under FHA's guidelines, you must ask for an initial COVID-19 forbearance by May 31, 2023. Also, a COVID-19 forbearance period can't extend beyond November 30, 2023.
The VA and the USDA announced that if your loan is VA-guaranteed or a USDA direct loan, you may request an initial COVID-19 forbearance for as long as the COVID-19 national emergency is ongoing. (In addition to CARES Act forbearances, the USDA is offering year-long forbearances to direct home loan borrowers who the coronavirus crisis has impacted.)
For FHA-insured loans, if the initial forbearance date is March 1, 2020 to June 30, 2020, you can get two six-month forbearances and two additional three-month forbearances. If the initial forbearance date is July 1, 2020 to September 30, 2020, you can get a three-month extension after the initial two 180-day periods. If the initial forbearance date is October 1, 2020 to June 30, 2021, you can only get two six-month forbearance periods. And you can get a six-month forbearance and six-month extension if your initial request is made between July 1, 2021, and September 30, 2021. If you request an initial 180-day forbearance on or after October 1, 2021, you can get an additional six months if the forbearance is exhausted and expires before the end of the declared COVID-19 national emergency on May 11, 2023.
The VA announced that borrowers with FHA-insured loans could get up to six months of additional mortgage-payment forbearance in three-month increments if they entered a forbearance on or before June 30, 2020.
USDA announced that the initial forbearance period may be up to 180 days, and a borrower may request an extension of up to an additional 180 days. Borrowers who received an initial CARES Act forbearance may be granted up to two additional three-month payment forbearances. The borrower must request each extension individually.
To get more information about your mortgage rights under the federal CARES Act, consider talking to a foreclosure attorney or a HUD-approved housing counselor. A HUD-approved housing counselor can provide helpful information (at no cost) about different ways to deal with your mortgage debt and avoid a foreclosure.
]]>In February 2010, the U.S. Department of the Treasury created the Hardest Hit Fund to provide millions of dollars to 18 states and the District of Columbia to help struggling homeowners avoid foreclosure. These states (and D.C.) each developed their own programs, which were administered by the state’s housing finance agency, to distribute the funds and assist distressed homeowners. The programs provided various foreclosure avoidance options to homeowners, like mortgage payment assistance, reinstatement assistance, and second mortgage payoffs.
While the states had until the end of 2020 to utilize their Hardest Hit funds, some states ended their programs early because their allocated money ran out. In other states, programs remained open or reopened to help homeowners affected by the coronavirus (COVID-19) pandemic. In the chart below, you can learn which programs are open, though not many are.
If you think you might be eligible for a particular program that’s still available, it's a good idea to apply for assistance soon as possible before the money runs out.
The states that received funds and set up Hardest Hit Fund programs are Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, D.C.
Individual Hardest Hit Fund programs are likely to end as soon as their funds run out. Most have already shuttered. So, if you think you could qualify for a particular type of assistance through a specific program, you should submit an application immediately.
A few states that previously closed their Hardest Hit Fund programs when their funding ran out reopened when more money became available. If your state’s program has closed, it’s a good idea to keep tabs on the program website in case it reopens, most likely to help homeowners affected by the coronavirus pandemic.
With the provided funds, each state and the District of Columbia developed programs to help homeowners facing foreclosure. Generally, the programs involve:
Programs often change, so check your state’s official website to find out what's available.
The homeowner typically receives assistance in the form of a 0% interest loan that is paid directly to the servicer. The loan is typically forgivable over a specified time period—meaning the homeowner won’t have to repay it, so long as certain conditions are met—usually at a rate of 20% over five years.
Housing counseling is sometimes available through state programs at no cost, although homeowners in all states are eligible to get free help from a HUD-approved housing counselor.
Eligibility requirements vary widely from state to state and among different state-specific programs. But the requirements often include the following:
State | Are Programs Open? | Type of Available Assistance | Basic Eligibility Requirements | Maximum Amount of Assistance | State's Official Hardest Hit Fund Website |
Alabama |
No, closed to new applicants as of March 12, 2021. |
n/a | n/a | n/a | www.hardesthitalabama.com |
Arizona | Closed to new applications. |
n/a |
n/a |
n/a | https://housing.az.gov/save-our-home |
California | No | n/a | n/a | n/a | http://keepyourhomecalifornia.org/ |
Florida | No | n/a | n/a | n/a | www.floridaelmore.org |
Georgia | No |
n/a |
n/a |
n/a | www.homesafegeorgia.com |
Illinois | No | n/a | n/a | n/a | www.illinoishardesthit.org |
Indiana | No, applications are no longer being accepted for mortgage assistance from Indiana’s Hardest Hit Fund. |
n/a. |
n/a |
n/a | www.877gethope.org |
Kentucky | No, but free financial counseling is available and some Kentuckians are eligible for free legal advice. | n/a | n/a | n/a | protectmykyhome.org |
Michigan | No |
n/a |
n/a |
n/a | www.stepforwardmichigan.org |
Mississippi | No | n/a |
n/a |
n/a | www.mshomesaver.com |
Nevada | No, the program has suspended accepting new applications. | n/a |
n/a |
n/a | https://nahac.org |
New Jersey | No | n/a | n/a | n/a | www.njhousing.gov/foreclosure |
North Carolina | No, but free housing counseling is available and you might qualify for legal assistance if your income is low. | n/a | n/a | n/a | www.ncforeclosureprevention.gov |
Ohio | No | n/a | n/a | n/a | https://savethedreamohio.gov |
Oregon | No, the mortgage relief program is now closed and not accepting any new applications. |
n/a |
n/a |
n/a | www.oregonhomeownerhelp.org |
Rhode Island | No | n/a | n/a | n/a | www.hhfri.org |
South Carolina | No | n/a | n/a | n/a | www.schelp.gov |
Tennessee | No | n/a |
n/a |
n/a | www.keepmytnhome.org |
Washington, D.C. | Yes | In an effort to support District residents during the coronavirus pandemic, the District of Columbia Housing Finance Agency (DCHFA) still offers some programs. | See program website for details. | See program website for details. | http://www.dchfa.org/homeownership |
Hardest Hit Fund programs change frequently, and determining whether you’re eligible for a particular program can be a complicated process. Check your state’s official website for updates and details about the application process. Additionally, you should be aware that not all lenders participate in every program.
If you have additional questions about the Hardest Hit Fund, make an appointment to talk with a HUD-approved housing counselor or call the phone number provided on the state's official Hardest Hit Fund website. If you need information about how foreclosure works in your state or possible defenses to a foreclosure in your situation, check out our sections on alternatives to foreclosure and fighting foreclosure in court, or consider talking to a foreclosure attorney.
Updated July 13, 2021
]]>The 50 states and the District of Columbia set up various programs with their allocated funding to distribute the money and assist distressed homeowners. While the programs vary considerably in the types of help offered and amounts provided, this article gives an overview of how they generally work. The chart below gives specifics for each state.
Again, programs vary from state to state but generally offer assistance with some or all of the following housing costs.
Funds are normally distributed directly to the mortgage lender or servicer, county treasurer, local taxing authority, utility company, property insurance company, or homeowners’ or condominium owners’ association as appropriate.
Sometimes, like in Massachusetts, assistance is structured as a nonrecourse grant you don’t have to repay. In other cases, like in the District of Columbia, the assistance is in the form of a loan.
Each program has its own eligibility requirements. However, usually, you must have a financial hardship (a loss of income or increase in expenses), which occurred on or after January 21, 2020, because of COVID-19. Qualifying hardships normally include job loss, a reduction in income, increased costs due to healthcare, or the need to care for a family member.
Other eligibility requirements typically include some or all of the following.
Again, eligibility requirements differ between states and even within various state programs. Also, homeowner assistance programs and requirements change often, and determining whether you’re eligible for a particular program can be a complicated process. Not all lenders and servicers participate in every program. Be sure to check your state’s official Homeowner Assistance Fund program website (see below) for the most recent information and eligibility requirements.
To apply for funding from a state-specific program, go to your state’s official Homeowner Assistance Fund website, shown in the chart below. Depending on the program, you’ll usually need to provide some documentation with your application, like:
Most Homeowner Assistance Fund programs will continue until the earlier of sometime in 2025 or 2026, or when all of the funds allotted to the program have been exhausted. Many states plan to use all their funds well before this time.
So, if you think you might qualify for assistance under a particular program, it’s best to apply as soon as possible.
If you get an unsolicited offer by phone, in the U.S. mail, through email, or by text message offering mortgage relief or foreclosure rescue services, be wary. Scammers sometimes target homeowners who’ve been affected by COVID-19.
You don’t have to pay a fee to apply to a Homeowner Assistance Fund program. If anyone asks you to pay a fee to get housing counseling or foreclosure prevention services from these kinds of programs, it’s a scam.
Homeowners in all states are eligible to get free help applying to their state Homeowner Assistance Fund program from a HUD-approved housing counselor. To find a counselor near you, go to HUD's website or call 800-569-4287. You can also find a counselor by:
If you need information about how foreclosure works in your state or possible defenses to a foreclosure, consider talking to a foreclosure attorney.
To find out how the homeowner-relief program works in your state, review the chart below for a summary and check out your state's official Homeowner Assistance Fund website.
State | Funding Allocated to the State | Type of Available Assistance | Maximum Amount of Assistance Per Household | Structure of Program | State's Official Homeowner Assistance Fund Website |
Alabama | $125 million | Mortgage payment assistance Loan modification assistance Lien extinguishment |
$50,000.00 | A grant that you don't have to repay | https://www.mortgageassistanceal.com |
Alaska | $50 million | Reinstate a mortgage in forbearance, delinquency, or default (the program will provide up to 12 months of mortgage assistance) Pay utilities, like electricity, natural gas, trash removal, water, and sewer, as well as other home-energy costs, like home heating fuel or oil, propane, firewood, and wood pellets (but phone, cable, and internet costs aren't eligible) Pay property taxes, homeowners' insurance, homeowners' or condominium association fees, cooperative maintenance fees Cover a portion of your continuing payments if your financial hardship due to COVID-19 is ongoing |
See the state's official Homeowner Assistance Fund website | See the state's official Homeowner Assistance Fund website | https://www.alaskahousingrelief.org |
Arizona | $197 million | Mortgage payments, including reinstatement Utilities, including electric, gas, home energy, and water Internet service, including broadband internet access service Homeowners' insurance, flood insurance, and mortgage insurance Homeowners association fees or liens, condominium association fees, or common charges Other housing-related costs related to a period of forbearance, delinquency, or default |
See the state's official Homeowner Assistance Fund website | See the state's official Homeowner Assistance Fund website | https://haf.azhousing.gov |
Arkansas | $54 million | Mortgage delinquency Utility and internet access services Property taxes, hazard insurance premiums, flood or wind insurance premiums, ground rents, condominium fees, cooperative maintenance fees, planned unit development fees, homeowners' association fees, or utilities that the servicer advanced to protect lien position (if included within escrow) |
$40,000.00 | A grant you don't have to repay | https://arkansashaf.com |
California | $1 billion | Delinquent housing payments (principal, interest, taxes, and insurance, plus any escrow shortages) or reverse mortgage arrearages | $80,000.00 | A nonrecourse grant that you don’t have to repay | https://camortgagerelief.org |
Colorado | $178 million | Three months of overdue housing payments or future mortgage payments, perhaps more in some circumstances | No maximum amount listed | A grant that you don’t have to repay | https://cdola.colorado.gov/emergency-mortgage-assistance |
Connecticut | $123 million | Mortgage payments (overdue and ongoing) Non-mortgage payments, like property taxes, homeowners' insurance, water and sewer liens, etc. (overdue and ongoing) |
$30,000.00 | A grant that you don’t have to repay | https://www.chfa.org/myhomect |
Delaware | $50 million | Delinquent mortgage payments and a principal curtailment, rate reduction, modification, or another resolution to make future mortgage payments more affordable Overdue homeowners' association fees, condominium association fees, property taxes, chattel loan payments, land lease payments, homeowners' insurance, and utilities (water and sewer only) |
$40,000.00 | A grant that you don’t have to repay | https://demortgagehelp.com |
District of Columbia | $50 million | Mortgage payments Property charges, like HOA fees, homeowners' insurance, and taxes Utilities and internet |
$120,000.00 | A grant that you don’t have to repay | https://haf.dc.gov |
Florida | $676 million | Mortgage payments (principal, interest, late fees, and charges for first mortgages and subordinate mortgages) Escrow payments Property taxes Homeowners’ insurance Utilities (including electric, gas, home heating oil, water, sewer, and internet) Flood insurance Homeowners’ association fees |
$50,000.00 | A grant that you don’t have to repay | http://www.floridajobs.org/community-planning-and-development/homeowner-assistance/homeowner-assistance-fund |
Georgia | $354 million | Mortgage reinstatement plus three months of mortgage payments Money to pay for a recast, loan modification, or another loss mitigation option, plus three months of mortgage payments Overdue non-escrowed property taxes or homeowners' insurance, condominium or homeowners' association fees, and utility payments |
$50,000.00 | See the state's official Homeowner Assistance Fund website | https://georgiamortgageassistance.ga.gov |
Hawaii | $50 million | The total amount from the federal government was split up and allocated to the counties of Maui, Kauai, Hawaii, and the island of Oahu. Programs vary. | $30,000.00 | A grant that you don’t have to repay | https://www.hawaiiancouncil.org/oahuhome http://hawaiicommunitylending.com/grants-loans https://www.meoinc.org/programs-services/community-services/housing-assistance |
Idaho | $72 million | Overdue mortgage payments, including reinstatement of a loan in forbearance, delinquency, or default Property taxes Homeowners' insurance premiums Homeowners' association fees and condominium dues Cooperative maintenance fees Utilities (in some instances), like power, sewer, trash, gas, and water |
$50,000.00 | An interest-free loan that must be repaid when you sell or transfer the home's ownership. The loan will be forgiven if the net proceeds from a sale don't cover the assistance amount received. And the loan might be forgivable after 10 years. | https://www.idahohousing.com/haf |
Illinois | $387 million | Overdue mortgage payments Mortgage reinstatement or other housing-related costs related to a COVID-related forbearance Past-due property taxes Delinquent homeowners' insurance and flood insurance Overdue homeowners' association, condominium association, or co-op association fees Delinquent rent for a mobile home lot Up to three months of future payments, if needed |
$30,000.00 | A grant that you don’t have to repay | https://www.illinoishousinghelp.org/ilhaf |
Indiana | $168 million | Mortgage payments (delinquent and future) and other escrowed home-related costs, like homeowners' association fees and property taxes | $35,000.00 | Assistance is structured as a five-year, forgivable loan (forgiven at the rate of 20% each year for five years) | https://haf.877gethope.org |
Iowa | $50 million | Mortgage payments Property taxes Homeowners' insurance (hazard, flood, and mortgage insurance) Homeowners' association fees Manufactured home/lot rent payments Land contract payments if you're buying under a legally recorded contract |
$25,000.00 | A grant you don't have to repay | https://www.iowafinance.com/ihaf |
Kansas | $56 million | Mortgage reinstatement Upcoming mortgage payments Other property charges, such as past-due property taxes, homeowners' and flood insurance, homeowners' association fees, condominium owners' association fees, cooperative maintenance charges, and common charges Overdue utility bills, including internet, broadband, electricity, gas, home energy, water, and wastewater costs |
$35,000 for mortgage reinstatement and mortgage payment assistance, and up to $10,000 for property charges and utilities | See the state's official Homeowner Assistance Fund website | https://kshousingcorp.org/kansas-homeowner-assistance-fund |
Kentucky | $85 million | Mortgage assistance for up to six months and mortgage reinstatement of overdue payments Payment of overdue, non-escrowed, property tax bills, homeowners' insurance, insurance bills Payment of homeowners' association/condominium dues and liens Payment of overdue utility (electric, gas/heat, water/sewer) bills |
$35,000.00 | A grant you don't have to repay | https://teamkyhaf.ky.gov |
Louisiana | $146.7 million | Mortgage reinstatement or other housing-related costs from a period of forbearance, delinquency, or default Mortgage payments Homeowners' insurance, homeowners' association fees, flood insurance, and mortgage insurance, if escrowed |
$25,000.00 | A grant, which you don't have to repay | https://haf.lacovidhousing.com |
Maine | $50 million | Past-due mortgage payments Mortgage reinstatement or other housing-related costs related to a period of forbearance, delinquency, or default Overdue homeowners' insurance, flood insurance, and mortgage insurance Delinquent property taxes to prevent tax foreclosures Overdue utility bills, such as electric, gas, sewage, and water bills Past-due amounts for internet, including broadband internet access service Delinquent homeowners' association or condominium owners' association fees Overdue manufactured home loan debt (chattel loan or retail installment contracts) |
$25,000.00 | A grant, which you don't have to repay | https://haf.mainehousing.org |
Maryland | $248 million | Overdue and future mortgage payments and other housing-related costs | Loan of up to $30,000 or a grant up to $10,000 | A loan or grant that you don't have to repay | https://dhcd.maryland.gov/Residents/Pages/HomeownerAssistanceFund.aspx |
Massachusetts | $180 million | Mortgage loan principal and interest Homeowners' association (or condominium owners' association) fees Property taxes Homeowners' insurance Past-due mobile home loan payments and eligible utilities |
See the state's official Homeowner Assistance Fund website | A grant, which you don't have to repay | https://massmortgagehelp.org |
Michigan | $242 million | Overdue mortgage payments and other housing expenses, like property tax and insurance escrow shortages Delinquent land contract payments, mobile home consumer loan payments, or mobile home park lot payments Past-due non-escrowed property taxes Overdue condominium or homeowners' association fees Delinquent homeowner's insurance Overdue bills for utilities, gas, electric, water, sewer Delinquent internet broadband services |
$25,000.00 | A grant you don't have to repay | https://mihaf.michigan.gov/p/home |
Minnesota | $128 million | Past-due: mortgage payments contract for deed payments manufactured or mobile home loan payments property taxes homeowners' insurance mortgage insurance ground rent/lease and tribal trust land lease payments manufactured or mobile home lot rent, and homeowners' or condo association fees, and cooperative fees or other common charges |
$35,000.00 | A grant you don't have to repay | https://homehelpmn.org |
Mississippi | $72 million | A reinstatement option, which includes up to three months of mortgage payment assistance The program can also help with a second mortgage lien And you might qualify for financial help to eliminate or reduce past-due payments associated with your mortgage, like delinquent property taxes |
$50,000.00 | A nonrecourse grant that you don't have to repay | https://www.mshomesaver.com |
Missouri | $138 million | First mortgage payments (principal and interest), escrow shortages or deficiencies, and any interest-bearing unpaid principal balance and any existing non-interest-bearing forbearance balance Subordinate mortgage payments (principal and interest) and a principal reduction or payoff of a non-profit/government bond second lien Manufactured or mobile home loan payments (principal and interest) |
$50,000.00 | A grant that you don't have to repay | https://www.safhrforhomeowners.com |
Montana | $50 million | Mortgage reinstatement costs Utilities Homeowners' insurance, flood insurance, and mortgage insurance Homeowners' association fees or liens, condominium owners' association fees, or common charges Delinquent property taxes Other housing-related expenses |
$25,000 (though the amount varies based on the type of assistance received) | Some assistance is in the form of a 0% interest loan Other kinds of assistance are in the form of a grant that you don't have to repay |
https://arpa.mt.gov/Housing |
Nebraska | $50 million | Mortgage reinstatement Upcoming mortgage payments Property costs, like property taxes, insurance, HOA fees and liens, utility liens |
$30,000.00 | A grant you don't have to repay | https://nebraskahaf.com |
Nevada | $120 million | Unemployment Mortgage Assistance (UMA) program Mortgage Reinstatement Assistance Program (MRAP) |
UMA: The program provides up to $3,000 per month for up to 12 months ($54,000 total) MRAP: Qualifying homeowners can get up to $35,000 per household |
See the state's official Homeowner Assistance Fund website | https://nahac.org |
New Hampshire | $50 million | Mortgage loan reinstatement (up to $20,000) Other property charges, like overdue property taxes, homeowners' insurance, homeowners association or condominium fees, co-op maintenance, and lot rents (up to $20,000) Utility costs (electricity, gas, and heating fuel) and internet payments (up to $3,000) |
$20,000.00 | If under $5,000, a nonrecourse grant that you don't have to repay Assistance equal to or more than $5,000 is structured as a two-year, non-interest bearing, non-amortizing, forgivable loan |
https://homehelpnh.org/homeowners |
New Jersey | $325 million | Reinstate a delinquent mortgage loan (principal, interest, taxes, and insurance), including payments that were missed because of a forbearance plan Mortgage payments of principal, interest, taxes, and insurance going forward (you can get a one-time payment to cover arrearages and up to four months of future mortgage-payment assistance) Overdue property taxes, municipal liens, or utility liens |
$35,000.00 | A subordinate lien recorded against the home that's forgivable after three years. You only have to repay the assistance if you sell your home or receive cash back from a refinancing within three years | https://njerma.com |
New Mexico | $55 million | Mortgage reinstatement, principal reduction, lien extinguishment Monthly mortgage payments if you're receiving unemployment benefits Property taxes, homeowners' insurance, reverse mortgage escrow shortages, and taxes and insurance that are due up to 90 days after you apply |
$20,000.00 | A grant that you don't have to repay | https://nmhomefund.org/homeowners |
New York | $539 million | Missed housing payments, to reduce mortgage debt to make monthly mortgage payments more affordable, and for unemployed homeowners, assistance with up to six months of future housing payments | $50,000.00 | Five-year, non-interest, non-amortizing forgivable loan. If the homeowner remains in the home for five years, the loan will be fully forgiven | https://www.nyhomeownerfund.org |
North Carolina | $273 million | Mortgage payments Mortgage reinstatement Property-related costs, like insurance, taxes, HOA fees |
$40,000.00 | A grant that you don't have to repay | https://nchaf.gov |
North Dakota | $50 million | Housing Reinstatement Program (HRP) Housing Payment Assistance Program (HPAP) Home Repair Program (HAFHR) |
$40,000 (HRP) $12,000 (HPAP) $30,000 (HAFHR) (Subject to program cap) |
A grant that you don't have to repay | https://www.applyforhelp.nd.gov/nd-help-homeowners |
Ohio | $280 million | Past-due mortgage payments and up to six months of upcoming mortgage payments Utility bills, property taxes, homeowners' association fees, and other housing costs, which aren't included in your mortgage payment |
$25,000 (mortgage) $10,000 (other housing costs) |
See the state's official Homeowner Assistance Fund website | https://savethedream.ohiohome.org |
Oklahoma | $74 million | Reinstatement of a delinquent mortgage Delinquent real estate taxes Restored or canceled homeowner's insurance Delinquent homeowners’ association dues |
$20,000.00 | A grant that you don't have to repay | https://www.ohfa.org/haf |
Oregon | $90 million | Past-due housing payments, like mortgage payments, property taxes, homeowners' insurance, HOA fees, etc. Ongoing housing-related payments |
$60,000.00 | Assistance is in the form of a five-year, 0%-interest, forgivable loan | https://oregonhomeownerassistance.org/program |
Pennsylvania | $350 million | Mortgage reinstatement Future mortgage payments Past-due charges that put property ownership at risk Delinquent utility bills |
$30,000.00 | A grant that you don't have to repay | https://pahaf.org |
Rhode Island | $50 million | Overdue mortgage payments Upcoming monthly mortgage payments Principal reduction Property taxes, homeowners' association fees, and condominium association fees Utilities, flood insurance or mortgage insurance, and other housing-related expenses if you get assistance for one of the expenses listed above |
$50,000.00 | A grant that you don't have to repay | https://www.rihousing.com/hafri |
South Carolina | $145 million | Mortgage payments Mortgage reinstatement Delinquent property taxes, homeowners' association fees, and utilities Government or nonprofit down payment assistance loans |
See the state's official Homeowner Assistance Fund website | See the state's official Homeowner Assistance Fund website | https://www.schousing.com/Home/SC-Homeowner-Rescue |
South Dakota | $50 million | Overdue mortgage bills (principal and interest), property taxes, homeowners' insurance, late fees (up to $25,000) Utility costs and utility arrears, such as water, sewer, electricity, propane/natural gas, and trash costs ($300 per month, a maximum of $5,000 total) |
$25,000.00 | Assistance for mortgage payments and other related costs is a 0% interest loan, with no payments due until you sell, refinance, transfer title, or move out Utility assistance is a grant, which you don't have to repay |
https://www.sdhda.org/social-programs/cares-act-housing-assistance-program/cares-act-housing-assistance-program-1 |
Tennessee | $168 million | Reinstatement Reinstatement plus future payments Reinstatement plus loss mitigation |
$40,000.00 | A grant that you don't have to repay | https://thda.org/help-for-homeowners/haf |
Texas | $842 million | Overdue mortgage payments, including money to put toward getting a loan modification if you can't afford your mortgage payments even after you get caught up Other past-due property expenses, like property taxes, homeowners' insurance, and homeowners' association or condo association fees |
$40,000 (mortgage payments) $25,000 (other property-related expenses) |
A grant that you don't have to repay | https://www.texashomeownerassistance.com |
Utah | $53 million | Mortgage payments and pay other home-related costs, like property taxes, homeowners' insurance, utilities, etc. | $25,000.00 | A grant that you don't have to repay | https://homeownersassistance.utah.gov |
Vermont | Mortgage payments, including reinstatement (enough to cover property tax and insurance escrow amounts, servicer advances, and fees) Homeowner's association fees or liens, condominium association fees, or other common charges Property taxes, and utilities, including electric, gas, fuel oil, and water |
$30,000.00 | A grant that you don't have to repay | https://vermonthap.vhfa.org | |
Virginia | $258 million | Mortgage payments for first and subordinate mortgages, including down payment assistance loans provided by nonprofit or government entities Mortgage reinstatement or other housing-related costs related to a period of forbearance, delinquency, or default Homeowners' insurance, flood insurance, and mortgage insurance Homeowners' association fees or liens, condominium owners' association fees, special assessments, or common charges delinquent property taxes to prevent tax foreclosures Personal property taxes and, in some cases, lot rental fees on unaffixed mobile homes. (You can't get money for lot rent under this program, but you might be eligible under the Virginia Rent Relief Program.) |
Assistance is limited to a maximum of the lesser of 20 months of eligible housing expenses or $30,000 per household. If you're getting other federal, state, or local housing assistance for the same expenses, you can't get assistance from this program. | A grant that you don't have to repay | https://www.virginiamortgagerelief.com |
Washington | $173 million | Mortgage payments, reduce mortgage principal, get a mortgage interest rate reduction Other housing-related costs, like homeowners' insurance, flood insurance, or mortgage insurance, delinquent property taxes, homeowners' association fees or liens, condominium association fees, or common charges, and similar costs payable under a unit occupancy agreement by a resident member/shareholder in a cooperative housing development, and down payment assistance loans that a nonprofit or government entity provided |
$60,000.00 | A grant that you don't have to repay | https://washingtonhaf.org |
West Virginia | See the state's official Homeowner Assistance Fund website | Delinquent mortgage payments, including escrow items (up to $15,000) Overdue utility bills (up to $2,500) Past-due property taxes, homeowners' insurance premiums, flood or wind insurance premiums, ground rents, condominium fees, cooperative maintenance fees, planned unit development fees, and homeowners' association fees not included in your monthly mortgage payment (up to $5,000) Overdue internet bills ($300) Some kinds of downpayment loans, like down payment assistance loans that a government entity or nonprofit provided. ($500) |
$15,000.00 | A grant that you don't have to repay | https://www.wvhdf.com/west-virginia-homeowners-rescue |
Wisconsin | $92 million | Mortgage payments (including reinstatement costs), insurance, property taxes, utilities and home energy costs, homeowners' association and condominium fees, lot fees, and more | $40,000.00 | Assistance below $10,000 is structured as a grant that you don't have to repay Amounts over $10,000 are structured as a one-year, non-interest bearing, non-amortizing forgivable loan |
https://doa.wi.gov/Pages/LocalGovtsGrants/Homeowner-Assistance.aspx |
Wyoming | $50 million | Mortgage reinstatement or other delinquent housing-related costs related to a period of forbearance, delinquency, or default Overdue property taxes, homeowners' insurance, and homeowners' association dues Past-due utility payments, including electricity, energy costs (fuel, oil, and propane), water, and sewer, but not internet |
$17,000.00 | A grant that you don't have to repay | https://dfs.wyo.gov/assistance-programs/home-utilities-energy-assistance/homeowner-assistance |
In early 2021, President Joe Biden signed the American Rescue Plan Act into law. This law created a Homeowner Assistance Fund, a federal program, to give around $10 billion to the states to help households that are behind on their mortgages and other housing expenses due to COVID-19.
Eligible homeowners in North Dakota who’ve experienced a financial hardship because of the pandemic can get a portion of the approximately $50 million allocated to the state by applying to the ND Help for Homeowners program. This program uses federal money to help homeowners pay mortgage payments and other home costs.
ND Help for Homeowners has three sub-programs that provide financial assistance to homeowners:
This program will provide up to $40,000 to cover:
Assistance can pay outstanding expenses from January 21, 2020, through the application date, for up to 24 months of eligibility.
Eligibility. To qualify for HRP assistance:
This program will pay up to $12,000 to cover future housing expenses, like:
HPAP assistance is available for up to six months or until you reach the maximum dollar amount.
Eligibility. To qualify for HPAP assistance:
With HAFHR, you can apply to get money to pay housing rehabilitation costs for roofing (including soffits, gutters, and fascia), drainage and runoff management, electrical and plumbing systems, and foundation expenses. You can also use assistance money to make environmental modifications and accessibility improvements. Depending on your circumstances, other requests will be considered and potentially approved.
You can get up to $30,000 under this program, but the total amount of assistance for all requests, like home repairs, mortgage payments, and other housing costs, can’t exceed the program cap of $40,000 per household.
Eligibility. To qualify for HAFHR assistance:
Assistance is in the form of a grant that you don’t have to repay. Payments from the program go directly to the loan servicer or other approved entity, not to homeowners.
The ND Help for Homeowners program will run from June 2022 until September 2025 or until program funds run out.
You can apply for help from the ND Help for Homeowners program starting June 20, 2022. Go to the ND Help for Homeowners website to submit your application. Funds are limited, and demand will probably be high. So, if you think you might qualify, you should apply as soon as possible after the application process becomes available.
In the meantime, you can take steps to get ready to apply once the program begins. Start organizing the documents you'll probably need, such as your most recent tax return or two most recent paystubs, photo ID, mortgage statement or property tax statement, and utility statements, and put them in a digital format (like a pdf).
Also, find out what type of mortgage you have, like an FHA-insured, VA-guaranteed, Fannie Mae, or Freddie Mac mortgage. Depending on what entity owns or backs your loan, you might qualify for a special loss mitigation option. Call your loan servicer to learn about what alternatives are available.
Be wary if you get an unsolicited offer by phone, mail, email, or text message offering mortgage relief or foreclosure rescue services. Scammers are increasingly targeting homeowners who’ve been affected by COVID-19. Homeowner Assistance Fund programs are free. If anyone asks you to pay a fee to get housing counseling or to receive foreclosure prevention services from this program, it’s a scam.
Go to the ND Help for Homeowners website to learn more about available assistance. Also, review the factsheets for the Homeowner Reinstatement Program (HRP), Homeowner Payment Assistance Program (HPAP), and Homeowner Assistance Fund Home Repair Program (HAFHR). You can also sign up to receive email updates.
You may also get help by going to HUD's website or calling 800-569-4287 to contact a housing counselor. A HUD-approved housing counselor will assist you at no cost.
]]>Unfortunately, most of these moratoriums have expired and widespread extensions are unlikely in 2022.
On June 24, 2021, the Biden Administration announced that three federal agencies—the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), and the Department of Agriculture (USDA)—agreed to extend their existing foreclosure moratoriums for federally backed mortgage loans, including FHA-insured, VA-guaranteed, and USDA loans, through July 31, 2021.
The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, also agreed to extend its foreclosure suspension through this date.
The Federal Housing Administration (FHA), which is part of HUD, continued its moratorium for all new foreclosure actions and foreclosure actions currently in process for FHA-insured, single-family loans and home equity conversion mortgages (reverse mortgages). The moratorium, however, doesn’t apply to vacant or abandoned properties. The moratorium also ceases evictions of persons from FHA-insured single-family properties, excluding actions to evict the occupants of legally vacant or abandoned properties.
FHA later extended its eviction suspension through September 30, 2021. But foreclosures themselves can resume after July 31, 2021.
To find out if you have an FHA-insured loan, you can look for an FHA case number on your mortgage contract. Sometimes, though, loans lose their FHA-insured status. Call your servicer (often your bank or lender) or HUD’s National Servicing Center at 877-622-8525 if you have questions about your loan's status. You can also check your billing statement to see if you pay a mortgage insurance premium (MIP). MIP is what FHA calls its mortgage insurance. If you’re paying MIP, then you have an FHA-insured loan.
The VA's foreclosure suspension applies to properties secured by VA-guaranteed mortgages, including those previously secured by VA-guaranteed loans but currently in VA’s real estate owned (REO) portfolio. The moratorium stops the initiation of foreclosures, the completion of foreclosures in process, and evictions. But vacant or abandoned properties aren’t covered.
The VA later extended its eviction suspension through September 30, 2021. Foreclosure-related evictions are not to be initiated or completed on properties previously secured by VA-guaranteed loans (including properties in VA’s Real Estate Owned portfolio). But the moratorium doesn't apply to vacant or abandoned properties. Foreclosures may resume after July 31, 2021.
To find out if you have a VA-guaranteed loan, look at the documents you signed when you took out your mortgage. VA-guaranteed loans contain specific language in the note and mortgage that identifies it as a VA loan. Also, fees paid to the VA will be shown in the closing documents.
The USDA foreclosure suspension applies to Single Family Housing Direct Home Loans and Single Family Guaranteed Home Loans. The moratorium halts the initiation of foreclosures, the completion of foreclosures in process, and evictions of homeowners from properties bought with a USDA direct or guaranteed home loan. Vacant and abandoned properties aren’t included in the moratorium, though.
The USDA also extended through September 30, 2021, the eviction moratorium for homeowners of properties financed or guaranteed by USDA. Foreclosures may start or continue after July 31, 2021.
Borrowers with mortgages directly extended by the USDA's Rural Housing Service (RHS) should be aware that they have this kind of loan. But homeowners with privately serviced RHS-guaranteed loans might not know about their loan’s status. To find out if you have an RHS-guaranteed loan, ask the servicer or check your closing documents from when you took out the loan. To learn more, go to the USDA Rural Development website.
The FHFA agreed to suspend foreclosures and REO evictions through July 31, 2021. The foreclosure moratorium applies to Fannie- and Freddie-backed, single-family mortgages. The REO eviction moratorium applies to properties that Fannie Mae or Freddie Mac have acquired through foreclosure or deed in lieu of foreclosure transactions.
The FHFA then agreed to extend the eviction suspension for properties that Fannie Mae or Freddie Mac acquire through foreclosure or a deed in lieu of foreclosure through September 30, 2021. But the foreclosure itself moratorium is expiring July 31, 2021.
To find out if Fannie Mae or Freddie Mac backs your loan, use the Fannie Mae loan lookup tool and Freddie Mac loan lookup tool. You can also ask your servicer if Fannie Mae or Freddie Mac owns or guarantees your loan, or call 800-232-6643 (Fannie Mae) or 800-373-3343 (Freddie Mac).
Multiple states imposed a temporary foreclosure moratorium when the coronavirus pandemic began. In various states, courts shut down to halt the spread of the virus and postponed foreclosure hearings as part of the process. Unfortunately, the majority of the moratoriums have now expired.
Locally, some places, like individual counties, temporarily suspended sheriff’s sales and post-foreclosure evictions due to the COVID-19 outbreak. However, foreclosure sales have resumed in many areas.
Some mortgage companies and banks voluntarily suspended residential property foreclosure sales and evictions at the beginning of the coronavirus crisis. Bank of America and JP Morgan Chase plan to restart mortgage foreclosures as soon as the federal moratoriums expire at the end of June 2021, but Wells Fargo will hold off on foreclosures until 2022.
A local foreclosure lawyer can advise you about your legal rights under federal law and tell you about any state laws that could protect you in a foreclosure. A HUD-approved housing counselor can provide you with helpful information (at no cost) about ways to avoid a foreclosure.
Also, while this article addresses mortgage foreclosures, if you're behind in paying your property taxes, certain counties are declaring a moratorium on property tax foreclosures and tax sales. Call your county treasurer’s office or tax collector's office, or look online, to see if your area has a moratorium.
]]>Eligible homeowners in South Dakota who’ve experienced a financial hardship because of COVID-19 can request some of the approximately $50 million allocated to the state by submitting an application to the SD CARES Housing Assistance Program. This program uses federal money to give loans to homeowners to make mortgage payments and grants to pay utility costs.
Specifically, you can use money from the SD CARES Housing Assistance Program to pay:
To qualify for relief from this program, you must have suffered a financial hardship (a material reduction in income or an increase in living expenses, or have qualified for unemployment benefits) after January 21, 2020, because of COVID-19.
You also have to meet these guidelines:
Assistance for mortgage payments and other related costs is structured as a 0% interest loan, with no payments due, which must be repaid when you sell, refinance, or transfer ownership of the property, or when the home is no longer your primary residence. Utility assistance is a grant, which you don’t have to repay.
Payments from the program go directly to the loan servicer or other approved entity, not to homeowners.
Apply online or with your smartphone through the SD Cares Housing Assistance Program Application website. You’ll have to provide some documentation with your application, like mortgage information or utility bills, proof of income, such as pay stubs and tax returns, and photo identification (a driver’s license or state/tribally-issued identification).
If you need help with your application, South Dakota has the following partner agencies that can assist you:
Even if a foreclosure has started, you might still have time to get assistance from the SD CARES Housing Assistance Program. Though, if financial assistance from the program is unlikely to prevent a foreclosure, you probably won’t qualify for help from it.
Also, you might have time to work out an alternative to foreclosure with your loan servicer.
If you get an unsolicited offer by phone, in the mail, through email, or by text message offering mortgage relief or foreclosure rescue services, be wary. Scammers are increasingly targeting homeowners who’ve been affected by COVID-19. Homeowner Assistance Fund programs are free. If anyone asks you to pay a fee to get housing counseling or to receive foreclosure prevention services from this program, it’s a scam.
If you have questions or need help with your application, call 605-773-3181, dial 2-1-1, or email info@sdhda.org. You can also review the program’s FAQs.
You may also get help from a HUD-approved housing counselor who will assist you at no cost. To find a counselor near you, go to HUD's website or call 800-569-4287.
]]>If you accept the servicer's offer, you pay the skipped payments at the end of the loan (rather than, say, paying the overdue amounts in an immediate lump sum or through a repayment plan). In return, the servicer gets out of having to comply with some federal mortgage servicing requirements.
The law also provides you with other rights if the servicer decides to offer a deferral option.
Under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, homeowners with a federally backed mortgage loan, regardless of delinquency status, experiencing a financial hardship due directly or indirectly to COVID-19, could get a forbearance while the coronavirus national emergency declaration was in place. (This declaration ended on May 11, 2023.) A "federally backed mortgage loan" is a loan that's guaranteed or made by a federal agency, like the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), or owned or securitized by Fannie Mae or Freddie Mac.
But a forbearance isn't the same as loan forgiveness; you'll still owe the skipped payments after a forbearance period ends. Borrowers with Fannie Mae, Freddie Mac, and FHA-insured loans, for example, can pay these amounts through a payment deferral program or similar alternative in which the borrower defers (postpones) repayment until the end of the loan. However, borrowers with other types of loans might have to pay the missed payments in a lump sum or through a repayment plan.
Under Regulation X, which implements the Real Estate Settlement Procedures Act (RESPA), most servicers must take certain steps and provide protections to borrowers facing foreclosure.
For instance, if homeowners seek loss mitigation, the servicer has to try to get a complete application from them. It has to exercise reasonable diligence in obtaining documents and information to finish the application. The servicer then has to review the application for any loss mitigation option the borrowers requested, like a loan modification, and all other available possibilities. (12 C.F.R. § 1024.41(b),(c)).
A Consumer Financial Protection Bureau (CFPB) interim final rule allows servicers to get out of complying with some mortgage servicing requirements if they offer payment deferrals to borrowers who finish their coronavirus-related forbearances. (12 C.F.R. § 1024.41).
Specifically, the law says that a servicer may provide borrowers with a payment deferral based upon an evaluation of an incomplete application. If the servicer offers a deferral, it doesn’t have to try to get additional information from the borrowers to complete their application or evaluate the borrowers for any other loss mitigation possibilities. It also doesn't have to provide an incomplete acknowledgment notice.
A “payment deferral” allows borrowers to resume making their regular mortgage payments when a forbearance ends. The missed payments are added to the end of the loan term.
So, the borrowers don’t have to pay the skipped amounts in a lump sum, in a repayment plan, or through a loan modification immediately after the forbearance is over.
Under the amended law, borrowers who complete a coronavirus-related forbearance plan and accept the payment deferral option don’t have to come up with the missed payments until:
Also, the deferred amount can’t accrue interest, and the servicer can’t charge you a fee for picking this option. The servicer must waive all existing late charges, penalties, stop payment fees, and other similar charges once the borrower accepts the deferral option, too. (12 C.F.R. § 1024.41(c)(2)(v)(A)(2)). However, the law doesn’t say how you have to pay the deferred amount when it’s due. You might have to pay a lump sum or make additional installments at that time.
This law is effective as of July 1, 2020. But as of early October 2020, servicers are just starting to offer deferrals as borrowers complete their initial coronavirus forbearances.
The rule applies to all principal and interest payments forborne under a COVID-19 forbearance program. (12 C.F.R. § 1024.41(c)(2)(v)). So, this kind of payment deferral plan isn’t limited to just CARES Act forbearances. All borrowers with coronavirus-related forbearances, even those who don’t have federally backed mortgage loans, are potentially covered.
It also covers all principal and interest payments due and unpaid by a borrower experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency. (12 C.F.R. § 1024.41(c)(2)(v)). Accordingly, the law might apply even if the borrower didn't get a forbearance, but just owes mortgage payments incurred while experiencing a financial hardship due, directly or indirectly, to the coronavirus crisis.
The law covers forborne principal and interest payments, but not skipped escrow amounts, like for property taxes and homeowners’ insurance. So, the servicer can demand a lump sum (or additional installment payments) to repay escrow advances it made during the forbearance period or to cover an escrow shortage after the forbearance ends.
But borrowers with FHA-insured mortgages don’t have to worry about unpaid escrow amounts that accrued during a forbearance. That's because a COVID-19 National Emergency Standalone Partial Claim includes the full amount of forborne payments, including escrow amounts. Fannie Mae and Freddie Mac also require the servicer to include any escrow advances when offering their COVID-19 payment deferral program to borrowers following a CARES Act forbearance.
The amended law also gives homeowners new rights when a coronavirus forbearance is over, like ending the delinquency (that is, bringing the loan current) upon acceptance of the payment deferral option.
Under federal law, the servicer may start a foreclosure when the loan obligation is more than 120 days delinquent. So, generally, borrowers who are in a forbearance plan for more than 120 days, and complete the plan without bringing the loan current, could potentially face a foreclosure. But the amended law says that any pre-existing delinquency ends when the borrower accepts an offer for the deferral option. If you later fall delinquent on your mortgage payments after agreeing to this deferral option, the 120-day period starts again.
If your servicer doesn’t comply with this law, you can file a lawsuit under RESPA to recover attorneys’ fees, actual damages, plus up to $2,000 in statutory damages if a pattern or practice of servicer noncompliance exists. Consider talking to a lawyer if you think your servicer is treating you unfairly.
Also, if you can’t resume making your regular payments at the end of your forbearance, the deferral option won’t work for you. You might consider applying for a loan modification or looking into other alternatives. If you need information about ways to avoid foreclosure, consider talking to a lawyer. A HUD-approved housing counselor can also provide information about loss mitigation options (at no cost).
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