Homeowners who have waited patiently to see if rates will go lower finally have their chance.
According to Freddie Mac, the 30-year fixed-rate mortgage fell to the lowest rate ever recorded during the week of January 6, 2021, to 2.65%. Rates are still close to their lowest levels in history.
But what about those who owe more than their home is worth and can’t refinance? What can they do? Up until 2018, there was HARP.
Now there are new refinance programs available to help homeowners with very little equity refinance at today’s low rates.
TIP: With home values increasing nationwide, many homeowners who previously had too little equity to refinance now qualify! Check your refinance eligibility. Start here.
Standard loans require you to have 10-20% equity before a refinance is possible. If a homeowner is “upside-down” with a mortgage, the borrowers would either have to pay down the mortgage to an acceptable level or give up trying altogether.
But current refinance programs may be available to homeowners with little or even no home equity.
The economic impact of the COVID-19 pandemic put immense financial strain on many American homeowners. With job losses, medical bills, and other unforeseen circumstances, keeping up with mortgage payments became difficult for millions This raised an important question is there a mortgage stimulus or other relief available to distressed homeowners?
The short answer is yes There are a few mortgage assistance and mortgage relief programs administered through government agencies and lenders to help homeowners manage financial hardships While there is no direct “mortgage stimulus” from Congress, federal mortgage relief funds are available.
Overview of Mortgage Relief Programs
Several forms of aid exist to help homeowners experiencing economic struggles keep up with housing payments and avoid foreclosure Main types of mortgage relief include
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Mortgage forbearance – Allows temporary reduction or suspension of payments.
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Loan modification – Adjusts loan terms to create more affordable payments.
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Refinancing – Gets a new loan, often with better terms.
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Mortgage assistance loans and grants – Provides direct financial aid for housing costs.
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Payment deferrals – Allows missed payments to be repaid later.
Specific programs are administered through government agencies like FHA, VA, and USDA. Additionally, many lenders offer proprietary mortgage relief options. Housing counselors can also connect homeowners with assistance programs.
Is There a Mortgage Stimulus from Congress?
There is no legislation passed by Congress called a “mortgage stimulus” that provides direct relief or subsidies for homeowners. However, federal aid is available through targeted mortgage relief programs.
Homeowner Assistance Fund (HAF)
The closest help to a true mortgage stimulus is the Homeowner Assistance Fund (HAF) established by the American Rescue Plan Act in 2021. The HAF provides almost $10 billion in relief for homeowners impacted by COVID-19.
States, territories, Tribes, and the Department of Hawaiian Home Lands receive funding through the HAF. Aid can cover mortgage payments, property taxes, insurance, utilities, and other housing costs.
To get HAF support, homeowners must apply through their state or local HAF program. Eligibility criteria varies but is focused on low-to-moderate income households.
Other Federal Mortgage Relief
Besides the HAF, the main government agencies offering mortgage relief options include:
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FHA – Offers COVID-19 forbearance and streamline refinancing even for underwater loans.
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VA – Has streamline refinancing to quickly lower rates on VA loans.
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USDA – Streamline refinancing available on USDA home loans.
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Fannie Mae & Freddie Mac – Allow high LTV refinancing through HIRO and FMERR programs.
The HAF and these federal programs provide mortgage relief without being an explicit “mortgage stimulus.” But they do supply aid that helps homeowners continue affording housing payments.
State and Local Mortgage Assistance Programs
In addition to federal mortgage relief, many state and local governments offer their own assistance programs. These are often funded by federal sources like the HAF but administered regionally.
For example, the Texas Department of Housing and Community Affairs has mortgage assistance grants for struggling homeowners. Florida, Illinois, Michigan and other states operate similar aid programs.
Reaching out to your state or county housing authority is the best way to find state-based mortgage relief options. States have more flexibility with eligibility, so local programs may provide help even if federal options don’t.
Lender and Servicer Mortgage Relief
Many individual mortgage lenders and servicers also offer hardship assistance programs for existing customers. These are specific to each company but often include:
- Payment deferrals or forbearance
- Loan modifications
- Extending loan terms
- Reducing interest rates
Contact your mortgage company or servicer directly to inquire about mortgage relief. Be prepared to explain your financial hardship and need.
Lender programs provide relief tailored to your situation that federal programs can’t always match. Don’t assume there’s no help available from your mortgage company.
Should I Expect Future Mortgage Stimulus Legislation?
While Congress could theoretically pass a mortgage stimulus bill at some point, it does not appear likely in the near future. The extensive aid programs implemented during COVID are winding down.
However, existing federal relief funds through the HAF will continue through 2025. And mortgage rates are expected to keep falling in 2023, making refinancing more affordable.
Barring another major economic crisis, future legislation likely won’t provide stimulus specifically targeting mortgages. But homeowners still have opportunities through federal, state, and lender mortgage relief programs.
How to Get Mortgage Relief or Stimulus
If you need mortgage help, here are some steps to take:
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Contact your lender/servicer – Discuss forbearance, modification, waiving fees, or refinancing.
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Check federal program eligibility – Research if you qualify for FHA, VA, USDA, Fannie Mae, or Freddie Mac relief options.
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Find state/local assistance – Your state or county may have grants, loans, or aid programs available.
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Consult a housing counselor – Non-profit counselors can advise you on all relief options.
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Prioritize essentials – Review your budget and cut discretionary spending to focus on housing payments.
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Consider other options – Alternative solutions include downsizing, roommates, loan from family, or selling your home.
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Avoid scams – Be wary of unsolicited offers, upfront fees, or paying outside normal channels.
The bottom line is mortgage relief exists through multiple avenues, even if there’s no legislation explicitly called a “mortgage stimulus.” Homeowners facing financial hardships due to COVID-19, job loss, or other issues have options to avoid foreclosure. It pays to be proactive and explore every potential source of aid.
FHA, VA and USDA loans: Take advantage of low interest rates for govvernment-backed loans
If you have a government-backed loan — an FHA, VA or USDA loan — you won’t be able to take advantage of the HIRO or FMERR programs.
Still, there’s another great refinance option available, to enable homeowners to reduce their mortgage interest rate — even if their home’s market value is low compared to their mortgage balance.
If your mortgage is backed by the Federal Housing Administration, the Department of Veterans Affairs or the United States Department of Agriculture, you have refinancing options, even if your mortgage is underwater.
FHA, VA and USDA loan programs all offer Streamline Refinance options, which are quick and affordable refinance loans with reduced eligibility requirements. These Streamline Refinance programs require little paperwork and take less time and money than a conventional refinance.
FMERR Eligibility: Qualify for mortgage relief and a lower interest rate
You may be eligible for FMERR if:
- Your current mortgage is owned by Freddie Mac*
- Your loan was originated on or after November 1, 2018
- Your LTV is at least 97.01% for a one-unit, owner-occupied resident
- You have made all your payments on time in the last 6 months
- Your mortgage balance is 97.1% or higher as a percentage of your home’s market value, for a one-unit, owner-occupied dwelling
*You may not even know that your mortgage is owned by Freddie Mac. If you’re unsure, use this lookup tool on the Freddie Mac website.
If you meet these conditions you are very likely to have access to lower rates but you need to act now before rates go up. Speak with your mortgage lender about relief options.
NEW Stimulus Details | FREE RENT & MORTGAGES
FAQ
Is there really a stimulus to pay off your mortgage?
Mortgage Refinance Relief FAQ
Although there’s no current mortgage stimulus from Congress, there is federal help available for homeowners. In March 2021, the American Rescue Plan designated $10 billion to help struggling homeowners.
What is the new federal mortgage relief program?
The Homeowner Assistance Fund (HAF) is a $9.961 billion federal program to help households who are behind on their mortgages and other housing-related expenses (utilities, property taxes, partial claims, etc.) due to the impacts of COVID-19.
What is Congress homeowner stimulus?
The Homeowner Assistance Fund (HAF) program provides funding to government entities to assist eligible homeowners who have been financially impacted by the COVID-19 pandemic to pay their mortgage and other qualified expenses related to mortgages and housing.
What is considered a hardship for a mortgage?
How does mortgage relief work?
Mortgage relief works by adjusting the terms of a homeowner’s mortgage agreement to address and alleviate financial stress. The process typically begins with the homeowner reaching out to their lender or a housing counselor to discuss their situation and explore available mortgage assistance options.
When is the deadline to spend the stimulus money?
States must spend the money by Sept. 30, 2025. To qualify, homeowners must have a mortgage balance of less than $548,250 as of 2021. They also must have suffered a financial hardship, such as a job loss, after Jan. 21, 2020.
What if money is being used to help with mortgage payments?
If money is being used to help with mortgage payments, it’s a good idea to call your servicer to discuss the process, verify that they participate in the HAF program, and let them know that they will likely be receiving payment from the HAF program.
How many homeowners are behind on mortgage payments?
More than 3 million households are behind on their mortgage payments, and nearly 1.7 million will exit their forbearance period in September. To help these homeowners, the Consumer Financial Protection Bureau has urged the White House to prevent mortgage servicers from starting foreclosure proceedings until after Dec. 31, 2021.
What is a mortgage modification?
Modifications are intended for homeowners who wish to keep their homes but are struggling with their current mortgage payments, typically due to a significant change in their financial situation. The goal of a loan modification is to achieve a monthly payment that the homeowner can afford over the long term.
What if a mortgage loan is a scam?
Additionally, scammers may ask you to sign over the title to your property, ask you to sign papers that you do not understand, say you should start making payments to someone other than your servicer or lender, or tell you to stop making mortgage loan payments altogether. Be careful to avoid scammers who engage in these practices.