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Biden makes homeowners eligible for lower mortgage payments



Homeowners with certain government-backed mortgages could get their monthly payments reduced by 25 percent if they are still struggling, the Biden administration announced on Friday as part of efforts to help keep people housed in the post-pandemic scenario.

Homeowners who are still “looking for work, re-training, having trouble catching up on back taxes and insurance, or are continuing to experience hardship for another reason,” are eligible, it said in a statement.

The move targets those with loans backed by the departments of Housing and Urban Development, Agriculture, or Veterans Affairs. They will be brought closer in line to those backed by Fannie Mae and Freddie Mac, the White House said.

Homeowners exiting mortgage forbearance and no longer facing financial pandemic-related hardship will continue to be offered options that move missed payments to the end of the mortgage at no additional cost. However, the White House acknowledges that many Americans still need deeper assistance than this.

The Biden administration has taken several steps aimed at protecting homeowners during the COVID-19 outbreak, including extending an eviction moratorium until July 31. The pandemic has played havoc with the nation’s economy and has caused more than 600,000 deaths.

“Where agencies have the authority and depending on homeowners’ financial conditions, agencies will require or encourage mortgage servicers to offer borrowers new payment reduction options to help them remain in their home,” the White House added.

The Consumer Financial Protection Bureau (CFPB) last month finalized new protections for struggling homeowners as it seeks to prevent a wave of foreclosures in the coming months, but it stopped short of a blanket ban.

Black and Hispanic U.S. mortgage borrowers are much more likely to be delinquent or in a “forbearance” program than white borrowers, highlighting how the COVID-19 crisis is exacerbating systemic racial disparities, CFPB data show. The consumer watchdog agency is also scrutinizing mortgage servicers’ compliance with pandemic relief programs, according to reports.

Close to 7.2 million American families have taken advantage of forbearance options since the U.S. government put forbearance measures in place. The number of households in forbearance has decreased by 50% from the pandemic peak, the Biden administration said.

The White House says these actions “will help more borrowers retain their homes, prevent future re-defaults, help more low-income and underserved borrowers build wealth through homeownership, and assist in the broader COVID-19 recovery.”

Still, nearly 1.75 million Americans remain in forbearance.

The CFPB offers more information on relief options, protections, and important deadlines on its website.

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