Biden extends protections to owners. What would you like to know


Historic row houses in the Columbia Heights neighborhood in Washington DC, USA

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Homeowners struggling in the middle of the Coronavirus pandemic received welcome news on Tuesday, with the Biden administration announcing it would extend forbearance and foreclosure relief programs.

The White House said the move would benefit the 2.7 million homeowners currently forborne from Covid and expand the availability of forbearance options for around 11 million other government-guaranteed mortgages nationwide.

“Since the crisis lasts much longer than expected, it is only appropriate to expand the remedies that we know to work,” said Sarah Gerecke, associate professor of planning at New York University. Many of these relief options were due to expire next month.

Do you have questions about the new protections? Here are some answers.

Is my mortgage eligible for the new protections?

Federally guaranteed mortgages, or roughly 70% of borrowers, qualify for forbearances and additional foreclosure protections.

Specifically, if you have a home loan with the Federal Housing Administration, the United States Department of Agriculture, or the United States Department of Veterans Affairs, you can take out a forbearance until June 30. If you have a mortgage from Fannie Mae or Freddie Mac, you may also delay your payments.

“The easiest way to find out if you are eligible and to request payment relief if you need it is to contact your lender,” said Greg McBride, Chief Financial Analyst at Bankrate.com.

Don’t know who your lender is? The Consumer Financial Protection Bureau has a guide to understand this.

How long can I be in abstention?

Some people can be on hold for up to 18 months, since the first stimulus package passed in March, the CARES Act, offered homeowners two 180-day relief periods, and now the Biden administration is giving them two more breaks. three months.

However, the rules vary depending on the type of government guaranteed loan you have.

If your mortgage is from Fannie Mae or Freddie Mac, you can delay your payments for up to 15 months. But you’ll have to register with your lender by the end of February, said Alys Cohen, lawyer at the National Consumer Law Center.

If your home loan goes through the Federal Housing Administration, the United States Department of Agriculture, or the United States Department of Veterans Affairs, you are allowed to delay your payments for 18 months, provided you do so before the end of June.

How to request abstention?

Do I have to prove that I am eligible for forbearance?

Heavy red tape prevented many homeowners from getting relief during the 2008 crisis, McBride said.

Fortunately, during the pandemic, all you have to do is certify that you have suffered financial hardship. No documents should be needed.

Do I have to do something if I am already abstaining?

Yes. Your abstention will not be automatically renewed. And although these breaks last up to 15 or 18 months, they sometimes occur at six or three month intervals.

If you need more time, you will need to call your lender and ask for it.

How will my missed payments be calculated?

Fortunately, if you are eligible for forbearance, you do not need to make up your lump sum payments at the end of the relief period. (Although if you’re among the 30% of homeowners who don’t have a guaranteed or government backed mortgage, you could be requested.)

Instead, you can request that your payments be deferred when your loan ends, McBride said.

For example, if you missed 12 months of payments, it will now take you 31 years to pay off a 30-year mortgage.

What if I am at risk of foreclosure?

If your mortgage is from Fannie Mae or Freddie Mac, you should be safe from foreclosure until the end of March.

If your home loan goes through the Federal Housing Administration, the United States Department of Agriculture, or the United States Department of Veterans Affairs, you are safe until the end of June.

You will not be foreclosed during the moratorium period unless you have left or abandoned your property, ”said Sara Singhas, director of loan administration at the Mortgage Bankers Association.

If you don’t have a government guaranteed mortgage or have housing debt in excess of your mortgage, including homeowners association fees or tax arrears, you may still be risk. People who live in manufactured homes are also generally not protected against foreclosure.

If you are concerned about losing your home, contact one of HUD’s housing counselors and contact your local legal aid office.

What if I am worried about resuming payments?

If you expect your ability to make your monthly mortgage payments to remain hampered beyond your forbearance term, you can ask your lender for a payment reduction, Cohen said.

While a lower monthly payment can mean a longer loan term and more interest, the option allows many people to stay in their homes. (If you go this route, you’ll want to know how your insurance and tax payments will be affected.)

I am a tenant. Does this offer me protections?

These new policies provide no direct relief to tenants.

However, on his first day at the Biden office, extended the ban on evictions for non-payment until March. A rent assistance fund of $ 25 billion has also been distributed among the states. To find out how to request money, watch this story.

Correction: The Federal Housing Administration issues home loans. An earlier version incorrectly indicated the name of the agency.

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