How to Get 25% Discount on Federally Backed Mortgages
With a foreclosure moratorium ending July 31, the White House’s new policy aims to stave off a wave of underprivileged homes by cutting monthly premiums by 25% for borrowers struggling to pay off their federal-backed mortgages. Here’s what you need to know about getting this discount – whether you are currently on loan or not.
How does the new policy work?
Under the CARES Act, a borrower experiencing financial difficulties due to COVID-19 is entitled to an abstinence – an interest – free pause in payments – on a government-backed mortgage for up to 360 days ( or six months from July 1). … This includes borrowers whose federal loans are secured by either the FHA, the US Department of Veterans Affairs, or the US Department of Agriculture.
Since many homeowners will be lenient after the foreclosure ban expires on July 30, the Biden administration is providing an option to lower monthly premiums by 25% in exchange for a longer term determined by your lender. Isaac Boltanski, director of policy research at Compass Point Research & Trading, explains to the Wall Street Journal : “If cutting monthly costs helps keep the borrower in his home until he gets back on his feet, then this is a win for the borrower, the politician, and Uncle Sam, because he owns the credit risk. “
Also note that the 25% cut rate is not the only relief if you get out of patience. You can also participate in a repayment plan or request a deferral or partial claim on your mortgage (more information on these options can be found in this CNET article ).
According to a White House newsletter , homeowners who are still “looking for work, retraining, having trouble paying taxes and insurance, or continuing to struggle for some other reason,” when they exit abstinence are eligible. To be eligible, all you have to do is contact your lender directly and prove that you are in economic difficulties.
How to apply for damages
If you have not applied for abstinence, you can still do it and buy a six-month break from payments on the mortgage, provided that you submit your application until September 30, when the program term expires. To do this, you need to contact your lender directly and make a request. Also check out this CPB page for some helpful tips on what you should ask for when you make a request.