Biden-Harris Loan Modification Program (Foreclosure Moratorium)
Foreclosure Moratorium Extended
If you are at risk of a foreclosure on your home, you are not alone. According to a recent Census Bureau survey, 8.2 million homeowners in the U.S. are currently behind on their mortgage payments.
On his first day in office, President Joe Biden extended the foreclosure and eviction moratorium until June 30, 2021. The extension was announced by the United States Department of Agriculture (USDA). According to USDA Deputy Under Secretary for Rural Development Justin Maxson, the extension of the moratorium is “an important step but we need to do more. The Biden Administration is working closely with Congress to pass the American Rescue Plan to take more robust and aggressive actions to bring additional relief to American families and individuals impacted by the pandemic.”
This moratorium, however, does not apply to property that is vacant or abandoned and documented as such by the USDA or the servicing lender.
Foreclosure Extension Option Includes Forbearance
President Biden’s foreclosure extension also includes an extension of COVID-19 forbearance protections for homeowners to June 30, 2021.
Homeowners who requested mortgage payment relief on June 30, 2020 or before, would be eligible for an additional grace period of up to six months, split into two month periods.
- Lenders may approve an initial 180-day COVID-19 forbearance no later than June 30, 2021. Single Family Housing Guaranteed Loan Program participants who received forbearance prior to June 30, 2020, are eligible for up to two three-month forbearance periods.
- There are no fees, interest or penalties added to the mortgage during forbearance.
Mortgage Scenarios in a Pandemic Age
Under the Coronavirus Aid, Relief, and Economic Security Act, services of federally-backed mortgages on single family homes have been required to provide forbearances to borrowers impacted by COVID-19.
- A mortgage forbearance agreement is between the borrower and the mortgage lender that agrees to reduce or suspend mortgage payments for a certain period of time and agree not to begin foreclosure procedures.
- Once the forbearance period ends, most lenders require the borrower to repay the mortgage amounts as a lump sum or enter into a new repayment plan.
Options After Forbearance
- Reinstatement – The borrower pays back all missed payments and then continues paying the original monthly mortgage payment amount.
- Repayment plan – The borrower adds a portion of the missed payments to the regular monthly mortgage payment. Repayment plans vary in length and amount.
- Payment deferral/partial claim – Missed payments are added to the end of the loan. No interest is charged on this amount.
- Loan modification – The lender rewords or modifies the loan to reduce the monthly mortgage payment through a lower interest rate, an extension of the term of the mortgage or a capitalization of arrearages.
Please note:The HAMP (Home Affordable Modification Program) introduced in 2009 under President Obama to help struggling borrowers avoid foreclosure, expired at the end of 2016. It has not been renewed.
Let Us Help You
Credit-Yogi works exclusively with Mortgage Audit Corporation for foreclosure and loan modification consultations and uses the same financial analysis software used by your lender. Credit-Yogi can have your exclusive foreclosure and loan modification consultation to you in five days. Call 1-866-964-9644 for a free consultation and complete mortgage audit.