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Will the FHA Introduce a 40 Year Mortgage?

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In many respects, the COVID-19 pandemic appears to moving optimistically toward its end, with many aspects of American’s life returning to more normal activities.  Nevertheless, some American homeowners who were severely impacted by the shutdowns, and were able to take advantage of the forbearance, are still climbing their way out of the financial challenges. 

As these homeowners exit forbearance, the Federal Housing Administration wants to help them navigate the next phase.  In an article published by HousingWire.com, information about an FHA program where an option to enter a 40 year loan modification with partial claim is described.  Reporter, Flavia Furlan Nunes states, “In September, the FHA posted a draft mortgage letter proposing a 40-year loan modification combined with a partial claim. The goal is to help borrowers reach the targeted reduction of 25% of the monthly principal and interest portion of their mortgage payments.”

It goes on to detail a proposal from Ginne Mae (Government National Mortgage Associate- GNMA), to introduce a 40 year mortgage.  Michael Drayne, Ginnie Mae acting executive vice president, explains, “We have begun the work to make this security product available because an extended term up to 40 years can be a powerful tool in reducing monthly payment obligations with the goal of home retention.” This offer would follow a loan modification term of 40 years already offered by Fannie Mae and Freddie Mac.

Read the entire article for more information about the programs and how homeowners have fared in paying some of their mortgage payments during forbearance.

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FHA Announces Forbearance Extended Relief for Some Homeowners

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DSNews.com released an article announcing some COVID Forbearance extensions that might allow some American homeowners to breathe a sign of relief.   As a result of the “continued impact of the pandemic”, the Federal Housing Administration is providing extended COVID-19 relief for some homeowners.

The extension specifically applies to borrowers who only recently became affected by the pandemic and are seeking mortgage relief.  According to the article, Principal Deputy Assistant Secretary for Housing Lopa Kolluri indicated, “Our top priority is to help as many individuals and families as possible to recover from the COVID-19 pandemic and keep their home.”

As a result, borrowers who are newly affected by the pandemic can now receive up to 6 months of COVID-19 Forbearance.   Additionally, up to 6 months of additional relief may be provided to borrowers who made requests in the past several months, between July 1, 2021 and September 30, 20201.

Read the entire article and see details of the forbearance periods and extensions.

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How Has the U.S. Managed to Avoid Another Foreclosure Crisis?

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As the COVID-19 pandemic began to spread across the United States last spring and states announced shut downs, many Americans found themselves unemployed or underemployed.  As a result, the federal government took swift action to provide mortgage payment relief by allowing homeowners to enter forbearance.  A year later, as of March 2021, 2.5 million homeowners were still in forbearance, according to the Mortgage Bankers of America.

Realtor.com published an article, noting the opinions of experts who explain that, despite this alarming number of U.S. homeowners behind on payments, a potential foreclosure crisis is unlikely.  In the article, reporter Sharon Lurye explains, the current housing market conditions are likely to provide a safety net for many of homeowners.  Houses, in many parts of the United States, continue to be in high demand and the inventory remains low.  Coupled with low interest rates, homeowners behind on payments, possible nearing the end of their forbearance, could still decide to sell the home for a profit. Additionally, as Americans getting their footing and learn to adjust to the current conditions, forbearance rates dropping nationwide.

Nevertheless, there are still areas of the country where homeowners are not only seriously behind on payments, but the housing market is not as strong due to weak economies and lack of employment.  These homeowners will continue to need assistance by reaching out to their lender with the hopes of renegotiating the terms of their loan in a way that makes it feasible to make the payments.  Still, some may decide to just sell and move to a rental property, assuming they can find a property to rend. 

The good news, it seems that the U.S. isn’t headed toward a wide-spread foreclosure crisis, however there are Americans that continue to struggle and may for months and years to come.

Read the entire article.

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How Will Homeowners Be Expected Pay Back Paused Mortgage Payments?

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As American homeowners suffer economic losses due to the global pandemic, mortgage companies allowed their borrowers to pause their mortgage payments, also known as forbearance.  This offers some relief and peace of mind to homeowners struggling to pay their monthly bills due to job loss or a reduction of pay.

However, in recent weeks, incorrect or misinterpreted information has caused some homeowners to panic, believing that once the forbearance period comes to an end, they will be expected to pay their missed mortgage payments back in a lump sum.  An article published by HousingWire.com sets the record straight.

The article, written by Ben Lane, indicates “Fannie Mae and Freddie Mac each issued a statement Monday, reiterating that borrowers are not required to repay their missed payments all at once when their forbearance period ends.” Additionally, Lane quotes the Federal Housing Agency Director, ‘“During this national health emergency, no one should be worried about losing their home,” FHFA Director Mark Calabria said in a statement. “No lump sum is required at the end of a borrower’s forbearance plan for Enterprise-backed mortgages.”’

Its important for borrowers and lenders to understand and communicate the next steps and what will be expected of the borrower once the forbearance period comes to an end.  Many lenders will offer a repayment plan, a payment deferral or a modification of the loan.  The borrower should reach out directly to their lender and discuss the details of these next steps.

Read the entire article.

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