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The COVID-19 pandemic has triggered a housing affordability crisis. Today, 1 in 5 renters is behind on rent, and just over 10 million homeowners are behind on mortgage payments. People of color face even greater hardship and are more likely to have deferred or missed payments, putting them at greater risk of eviction and foreclosure.... Now, homeowners will receive urgently needed relief as we face this unprecedented national emergency.
The extensions are a coordinated effort with the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs, and the Department of Agriculture and will apply to property owners with mortgage loans guaranteed by these agencies. Those with Fannie Mae (OTCMKTS: FNMA) and Freddie Mac (OTCMKTS: FMCC)-backed mortgages are covered under the Federal Housing Finance Agency's recent extensions.
Here's what today's announcements actually mean for property owners: First, if you have a USDA-, FHA-, or VA-backed mortgage loan, you can now apply for forbearance through June 30, 2021. This was previously set to March 31.
You can also maintain your forbearance longer. Initially, borrowers could have up to 360 days of forbearance, pausing their mortgage payments for nearly a full year. Today's announcement extends that timeline, allowing property owners who entered forbearance on or before June 30, 2020, an additional six months of forbearance, split into three-month increments. In total, borrowers can now pause payments for 18 months total.
Finally, today's move also extends the foreclosure ban on government-backed properties. Servicers cannot initiate foreclosures on these homes until after July 1 at the earliest. This was previously set to expire at the end of March as well.
The White House statement says: "Today's actions directly benefit the 2.7 million homeowners currently in COVID forbearance and extend the availability of forbearance options for nearly 11 million government-backed mortgages nationwide. Communities large and small need this assistance."
The extensions are likely welcome news for struggling property owners, but they don't help everyone. Only those with federally guaranteed loans are eligible for these relief measures. If your loan is owned by Freddie Mac or Fannie Mae, you have other options, per the FHFA.
The latest stimulus package -- dubbed the "American Rescue Plan" -- will also offer help if you don't have a federally backed property. According to the White House statement, the plan includes a Homeowners Assistance Fund containing $10 billion in aid.
"This relief is critical for homeowners with mortgages in the private market who are not able to take advantage of today's actions and may face longer-term challenges," the statement said.
Finally, there's one more caveat to note -- especially if you're a landlord: Today's announcement did not extend the federal eviction ban President Biden and the Centers for Disease Control have in place. That is currently set to expire March 31. (However, it will likely be extended as we get closer to that time.)
The bottom line
If the pandemic has you struggling to pay the bills, you don't have to lose your home or investment properties. Contact your mortgage servicer to get on a forbearance plan, and lighten the financial load. Deferment, refinancing, or a loan modification might also be an option.
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