Mortgage Relief Programs: What Homeowners Should Know

Before you start looking into your mortgage relief options, determine who holds your mortgage, who your current loan servicer is, and whether or not you are delinquent on your loan.

Missing payments limits your mortgage relief options, so it’s crucial to act as early as possible.

In all cases, you’ll need your lender’s cooperation, so contact your loan servicer as soon as you know you may have trouble making your payments.

What Kind of Mortgage Relief Do You Need?

Mortgage relief programs vary greatly and may be specific to a certain type of loan, such as those backed by the Federal Housing Administration, Department of Veterans Affairs, or U.S. Department of Agriculture.

They may also include Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corp. (Freddie Mac) loans. Fannie Mae and Freddie Mac each have a loan lookup tool on their websites.

Refer to your loan paperwork to verify what kind of mortgage loan you have. Your closing disclosure should identify your transaction as a VA mortgage, an FHA home loan, a USDA mortgage, a conventional mortgage, or another mortgage loan. When in doubt, call your loan servicer for more information, which is the company that sends and processes your monthly mortgage bills. Often, it’s the lender you worked with, or that lender may have sold your loan to a different servicer.

Outdated Mortgage Relief Programs

You may have heard about a set of mortgage relief programs for homeowners in the wake of the 2008 housing crisis. Such programs have since terminated or expired, including:

• Home Affordable Refinance Program (HARP, also known as the Obama Mortgage) expired in 2018
• Home Affordable Modification Program (HAMP) expired in 2016
• Coronavirus Aid, Relief and Economic Security (CARES) Act expired Dec. 31, 2020

In 2021, Freddie Mac paused its enhanced relief refinance, and Fannie Mae paused its high loan-to-value refinance loans until further notice.

Mortgage Loan Relief for Conventional Mortgages

Conventional mortgages are home loans backed by Fannie Mae and Freddie Mac, so-called government-sponsored enterprises, or GSEs. They were chartered by Congress decades ago to make mortgages more widely available by purchasing qualifying loans from lenders and packaging them into bonds sold to investors.

GSE-backed mortgages offer the following relief options to help borrowers stay in their homes:

• Refinance: Fannie Mae and Freddie Mac offer refinance options for borrowers who are current on their mortgages and need more affordable terms. Programs like Freddie Mac’s Refi Possible and Fannie Mae’s RefiNow are designed for low- to moderate-income homeowners, including those earning at or below 80% of the area median income (AMI).
• Home Loan Forbearance: Forbearance allows you to temporarily pause or reduce mortgage payments during financial hardship. Missed payments must be repaid later, often through repayment, refinancing, or when the home is sold.
• Mortgage Reinstatement: If you can pay all missed payments, taxes, interest, and insurance in a lump sum, you may be able to reinstate a delinquent mortgage and return it to good standing.
• Home Loan Repayment Plan: A repayment plan lets you catch up on missed payments over time by adding a portion of the past-due amount to your regular monthly payment for a set period.
• Mortgage Payment Deferrals: Fannie Mae and Freddie Mac allow eligible borrowers to defer missed payments to the end of the loan term without penalty, avoiding the need for a lump-sum payment.
• Loan modification: A loan modification permanently adjusts your mortgage terms, such as extending the loan term, lowering the interest rate, or reducing or deferring principal, to make payments more affordable. Acting early can improve your options.

Conventional mortgage borrowers with loans that are not Fannie/Freddie GSE mortgages should contact their loan servicer to learn which relief options are available to them. Conventional mortgage relief options are not standardized, so your loan servicer’s willingness to work with you will determine your options.

Mortgage Relief Programs for Government-Backed VA, FHA, and USDA Loans

Those with an FHA, VA, or USDA mortgage should consider the mortgage relief options listed above. Government-backed loans require the servicer to exhaust several possibilities before resorting to foreclosure.

However, borrowers must contact the servicer to work out a solution. These mortgage relief programs are not applied automatically.

In times of natural disasters or national emergencies, FHA mortgages, VA home loans, and USDA loans may offer automatic mortgage relief for borrowers who meet certain criteria.

For example, homes damaged by a natural disaster in a federally declared disaster area may be eligible for an automatic foreclosure moratorium if the homeowner purchased the house with a government-backed FHA, VA, or USDA loan.

However, you should contact your servicer as early as possible to avoid complications and more costly remedies to bring the mortgage into good standing.

Streamline Refinancing

USDA, FHA, and VA mortgages all offer some form of streamline refinancing, which can benefit borrowers when rates are falling. Refinancing can adjust the terms of your mortgage, lower your monthly payments, reduce your interest rate, or switch you from an adjustable-rate to a fixed-rate mortgage. In many cases, you won’t need an appraisal or credit check for these loans, according to the official websites of all three loan guarantors.

However, streamline refinance loans don’t permit you to receive cash back, and you can not refinance to change your existing loan to another type of mortgage.

For example, you can not refinance a conventional mortgage into a VA loan using streamline refinancing. Still, you can refinance an existing VA home loan mortgage with a VA streamline interest rate reduction refinance loan (IRRRL).

The VA offers the following options to VA borrowers who need mortgage relief:

• Veterans and their surviving spouses can get VA financial counseling, whether or not they have a VA mortgage. If you qualify for the VA loan program, you qualify for financial counseling.
• Veterans and surviving spouses with a VA-backed mortgage or a VA direct loan can ask a VA loan technician to help them deal with any VA lender. Call the VA at 1-800 827-1000. The VA will automatically assign a VA loan technician to any VA borrower who is more than 60 days past due on a mortgage payment.