Is there a homeowner relief program in 2022?
Although Congress has wound down much of its Covid-era stimulus, there are still mortgage relief programs available to homeowners who need them.
Mortgage relief can come in many forms. Whether you need a lower rate and payment or a break from making payments altogether, there are options. Here’s what to do.
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Mortgage relief programs for 2022
If you’ve had a temporary job loss or reduction in income, it can be hard to keep up with mortgage payments — especially with an above-market mortgage rate that’s keeping your payments artificially high.
Luckily, there are mortgage relief options that can help. The right one for you will depend on your current financial situation.
Homeowner relief options in 2022 include:
- Refinance to a lower interest rate and payment
- Use a Streamline Refinance (no appraisal required)
- Ask for loan forbearance to pause your mortgage payments
- Talk to your mortgage servicer about a loan modification
Currently, there’s no Congress mortgage stimulus program. But homeowners have plenty of alternatives.
So explore your options. If you’re not sure where to begin, start by reaching out to your mortgage loan servicer. (This is the company to which you make payments and its name will be listed on your latest mortgage statement.)
Your servicer will help you understand your choices and determine which mortgage relief path is right for you.
Refinance to lower your payments
Refinancing can offer homeowners relief by reducing their monthly payments. Most of the time, a refinance will lower your interest rate and extend your loan term — both of which result in a more affordable monthly mortgage payment
Thanks to rising home values, even homeowners who made a very small down payment or refinanced recently could be eligible for today’s low interest rates.
What’s more, not everyone needs great credit or perfect finances to qualify for a refinance.
Even if you don’t think you’d qualify for a refinance, it’s worth talking to a lender. Many homeowners are eligible but don’t know it yet.
Select programs, like the government-backed Streamline Refinance, can help borrowers refinance with little, no, or negative home equity.
Even if you don’t think you’d qualify for a refinance, it’s worth talking to a lender.
Homeowners might be surprised at the amount of equity they gained as housing prices shot up nationwide. And with rates still near historic lows, many borrowers can easily save hundreds every month.
Those savings could put some cushion back in your budget and help improve your personal finances.
Congress mortgage relief programs (Covid-19 mortgage relief)
Homeowners who have experienced financial hardship during the pandemic have a few options for mortgage relief.
To help borrowers struggling with mortgage payments due to unemployment or illness, Congress enacted mortgage stimulus programs as part of the CARES Act.
Many of these assistance programs have been extended into 2022 to help those who are still struggling financially.
If you find yourself in need of financial assistance, current options include:
Loan forbearance temporarily pauses your monthly mortgage payments while you’re going through financial hardship. The debt isn’t forgiven — you’ll have to make up the missed payments after forbearance ends — but this can provide some breathing room while you get back on your feet financially.
Your current forbearance options depend on what type of mortgage loan you have, and whether you’ve used a forbearance plan previously.
- Conventional loans (backed by Fannie Mae or Freddie Mac) — If you were in a forbearance plan as of February 28, 2021, you can request up to two 3-month extensions. If you have not yet requested forbearance, you can still do so. There is currently no deadline for requesting initial loan forbearance on conventional mortgages
- Government-backed loans (FHA, VA, or USDA) — If you were in a forbearance plan before June 30, 2021, you can request up to two additional 3-month extensions. If you have not yet requested an initial forbearance, you can still do so. Homeowners with loans backed by FHA, VA, and USDA can request forbearance for as long as the Covid-19 National Emergency is in effect
Source: Consumer Financial Protection Bureau (CFPB)
Once your forbearance period reaches its end date, you’ll have a few options for how to exit forbearance and repay your missed loan payments.
Importantly, your loan servicer cannot ask you to repay everything as a lump sum right after exiting forbearance. It’s more likely you’ll pay the missed amount in installments along with your regular mortgage payments or defer repayment until you sell the home or refinance.
Refinance after forbearance
In the past, it could be difficult to refinance your home loan after having been in a forbearance plan. But those rules have loosened up due to the unprecedented spike in mortgage forbearance during Covid.
Now, it’s possible for many homeowners to refinance as little as three months after ending their forbearance plans.
Rules can vary by loan program and mortgage lender. So talk to a loan officer or mortgage broker to learn whether you’re refinance eligible.
For homeowners who need to exit forbearance but don’t qualify for a refinance, a final option could be a loan modification.
Modification is for homeowners who have had a permanent — rather than a temporary — change in their financial circumstances. This involves your loan servicer agreeing to lower your rate or extend your loan term to make the mortgage payments more affordable.
Homeowners with FHA, VA, and USDA loans might even be able to take advantage of Biden’s new mortgage stimulus program that lowers payments by as much as 25% via a loan modification.
However, loan modification is typically seen as a last resort for homeowners who can’t refinance or take advantage of other mortgage relief programs.
Mortgage options from Fannie Mae and Freddie Mac
Homeowners with conforming loans backed by Fannie Mae or Freddie Mac have options for mortgage relief.
If you’re experiencing a temporary hardship, it’s not too late to ask about forbearance. There’s currently no deadline to make an initial forbearance request with your loan servicer.
In addition, Fannie and Freddie recently came out with new refi programs that make it easier — and cheaper — to lower your interest rate and mortgage payment.
These refinance programs have unique benefits that can offer financial relief to homeowners, including:
- Lower mortgage rate and monthly payment
- Reduced closing costs with no appraisal fee
- Easier debt-to-income qualification
These new loan options can offer big savings for homeowners who might not otherwise qualify to refinance.
Streamline refinancing for FHA, VA, and USDA loans
Popular mortgage relief programs since 2009 (including HARP, HAMP, FMERR, and HIRO) have only been available to homeowners with conventional mortgages backed by Fannie Mae or Freddie Mac.
But what if your loan is government-backed?
Homeowners with federally-backed FHA, VA, and USDA mortgages have access to different mortgage programs than those with conventional loans.
Namely, they can use a Streamline Refinance.
The Streamline Refinance is a special mortgage refi program for people with government-backed loans.
It’s similar to a mortgage relief refinance, because you can use a Streamline Refi even if your home is underwater or has very little equity.
And a Streamline Refinance has other benefits, too.
- There’s less paperwork because you don’t have to re-verify your income or employment or get the home appraised
- Government-backed loans typically have below-market mortgage interest rates
- Closing costs are typically cheaper
Homeowners can qualify for an FHA Streamline if they’ve made at least three consecutive on-time payments on their existing FHA loan.
Even if you make your three consecutive payments while in forbearance, you may qualify for FHA Streamline refinancing. The Department of Housing and Urban Development (HUD), which oversees the Federal Housing Administration, is one of the more lenient housing agencies.
For a VA Streamline Refinance (also called the ‘IRRRL’), the rules are more lenient.
You can use this refinance even if your current loan is delinquent. However, the lender must verify that the reason for delinquency has been resolved and you’ll be able to make payments on the new loan.
Relief refinance programs: HIRO and FMERR
Former relief programs from Fannie Mae and Freddie Mac, including the Enhanced Relief Refinance (FMERR) and the High-LTV Refinance Option (HIRO), have been paused due to a low number of applicants.
These programs were largely designed to offer mortgage relief to ‘underwater’ borrowers — those who owe more on their mortgage than their home is worth. Thanks to rising home values nationwide, the number of underwater borrowers has shrunk dramatically.
As a result, many homeowners are eligible to refinance but just don’t know it yet.
So if you’re looking for a mortgage relief refinance, it’s still worth talking to a lender. There are a wide variety of refinance options available today, and you may well qualify for one of them.
Veteran mortgage relief options
One benefit of a VA loan is that the Department of Veterans Affairs can help you out if you’re having trouble making mortgage payments.
Veteran mortgage assistance comes in two forms:
- You could use a Streamline Refinance loan (IRRRL) to lower your rate and payment
- You could get help from a VA loan professional to figure out your repayment plan
If you’re underwater on a VA loan and need to refinance, you may be able to use the VA Streamline Refinance (IRRRL) to do so.
Like other Streamline programs, the IRRRL requires no income or employment check, and skips the home appraisal — so your LTV won’t matter.
If you’re not sure whether a refinance is right for you, you might take advantage of the other VA relief program.
For VA loan holders as well as veterans with non-VA mortgages, the VA offers access to professional counselors who can help you if you’re having trouble making your payment.
These people help veterans figure out whether they should refinance, try to restructure their loan, or take another measure to prevent foreclosure.
Even better, the VA’s “loan technicians” work with your lender on your behalf — so you don’t have to figure out all the logistics of a mortgage relief program yourself.
What is a mortgage relief refinance?
When most people think of government or Congress mortgage relief, they’re thinking of HARP — the Home Affordable Refinance Program.
HARP was a government program rolled out by the Federal Housing Finance Agency in 2009. For nine years, it helped millions of homeowners refinance after being hard-hit by the housing crisis.
The HARP program ended in 2018. And similar programs, including Fannie Mae’s HIRO and Freddie Mac’s Enhanced Relief Refinance, were also discontinued.
The reason? Home values have been rising dramatically.
Property values shot up at a record rate in 2020 and 2021. As a result, homeowners nationwide saw their equity levels increase. And the number of underwater borrowers shrunk to just 3% of the market.
There are still programs available to help homeowners with little or no equity, including 97% LTV refinancing from Fannie and Freddie and Streamline Refinancing from FHA, VA, and USDA. However, fewer and fewer homeowners need these programs.
Today, the focus is on helping homeowners who were impacted by Covid-19 lower their mortgage payments.
Do you qualify for a lower interest rate?
Refinancing can offer relief from high mortgage payments. By lowering your mortgage interest rate and extending your loan term, you can typically reduce your monthly payment and take some pressure off your budget.
To qualify for a refinance, you’ll need to meet some basic criteria. But these can be very flexible depending on the loan program.
Conforming loan refinance
- Credit score of 620 or higher
- No missed mortgage payments in the last year
- Loan-to-value ratio (LTV) of 97% or less
- Debt-to-income ratio of 65% or less with RefiNow or Refi Possible
- Your current loan is backed by FHA, VA, or USDA
- No missed mortgage payments in the last year
- Debt-to-income ratio requirements are flexible
- Credit score requirements are flexible
- No appraisal required, so there’s no maximum LTV
If you’re not eligible to refinance, don’t worry. You may have other options.
Forbearance is still available to homeowners who need temporary mortgage relief due to a job disruption or other financial hardship. And loan modification may be available to those with longer-term relief needs.
Reach out to your mortgage lender or loan servicer to learn more. Your loan advisor will help you understand the types of relief available and which one is right for you.
Mortgage stimulus programs FAQ
Two mortgage relief programs — HIRO and FMERR — have been put on hold because homeowners currently have so much equity that there’s little need for relief refinancing. However, if you do need mortgage assistance, you still have options. Some Congress mortgage stimulus programs enacted during Covid, such as forbearance, are still available. And homeowners with FHA, VA, or USDA loans can often refinance a high-LTV loan using Streamline Refi programs backed by the federal government.
The CARES Act and subsequent American Rescue Plan have provided mortgage relief during the Covid-19 pandemic. These programs do not refinance your mortgage but let you postpone repayment while keeping your loan active. The CARES Act also created a temporary moratorium on foreclosures and renter evictions.
Biden has proposed several stimulus programs to help with homeownership costs. In terms of mortgage relief, he recently enacted a measure to provide mortgage assistance to homeowners with federally backed FHA, VA, and USDA loans. Under this program, qualified borrowers can modify their mortgages to get a lower interest rate and potentially reduce their loan payments by up to 25 percent. Contact your mortgage servicer to learn whether you’re eligible for a loan modification.
The Freddie Mac Enhanced Relief Refinance (FMERR) is currently on pause due to a low volume of applicants. FMERR was meant to help homeowners refinance with very little home equity. But, due to rising home values, many U.S. homeowners have enough equity to refinance without needing a special, high-LTV program.
No, the HARP program is no longer available. HARP, the Home Affordable Refinance Program, expired in 2018. You can no longer apply or be accepted for this mortgage relief program.
Yes, the VA can help veterans and service members who are struggling to make their mortgage payments. The association provides housing counselors who will help you figure out the right course of action and work with your mortgage servicer to set your payment plan back on track. The VA can help with mortgage payment issues even if your current mortgage is not backed by the Department of Veterans Affairs.
Save more with a mortgage refi program in 2022
For homeowners struggling with their mortgage payments, it’s a wise time to refinance.
Taking advantage of a high-LTV refinance or even a standard refinance could have huge benefits.
Verify your new rate to see just how much you could save with a mortgage refinance in 2022.