Landlord Mortgage Relief Programs
In addition to mortgage assistance programs for homeowners, landlords have options as well. Not as far-reaching or as generous as those for single-family homeowners, multi-family property landlords with federally backed mortgages can request forbearance for 30 days, with another 30-day extension available. Check with your state government offices for programs offering assistance to landlords.
With a moratorium on rental evictions extended through January 31, renters are protected against evictions, but landlords still have mortgages to pay. American Banker reports that banks have been working with landlords of one- to four-unit properties to reconfigure their loan packages, but time is running out for forbearance. It’s projected that 2 percent of those loans will become delinquent by the end of 2021, sending the landlords and the banks into a tailspin, which is projected to last up to two years before recovery sets in.
References
Successive Stimulus Bills Have Offered Relief To Homeowners And The American Rescue Plan Extends Mortgage Forbearance And The Foreclosure Moratorium Until The End Of June
Throughout the pandemic the federal government has introduced legislation aimed at easing the financial impact of the covid-19 pandemic. Homeowners who are dependent on a stable household income to cover mortgage payments are particularly vulnerable in a struggling jobs market.
The CARES Act, passed in March 2020, offered the first major assistance to those struggling to cover mortgage payments due to either a loss of income or illness. The stimulus package included a year of mortgage assistance programmes, which was then extended by the Biden administration.
Important Deadlines For Mortgage Relief
Since March 2020, homeowners have had certain protections under the CARES Act.
These measures apply to conforming loans as well as FHA, VA, and USDA-backed loans.
- Foreclosure moratorium: Mortgage companies cannot start foreclosure proceedings against homeowners who are unable to make home loan payments until at least
- Mortgage payment relief: Homeowners may opt into a forbearance plan, pausing mortgage loan payments for up to 12 months if they are experiencing financial hardship
As of , borrowers with Freddie Mac or Fannie Mae loans can request an additional 3 months of mortgage forbearance, for up to 15 months total. To be eligible, you must be in a current CARES Act forbearance plan as of February 28, 2021.
Some homeowners with federally-backed loans can also make an initial request for loan forbearance up to February 28, 2021.
However, this may vary by loan type FHA, VA, or USDA and by loan servicer. So check with yours to see how much time you have to submit a forbearance request.
Read on to learn more about how loan forbearance works and how to request mortgage relief if youre experiencing financial hardship.
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Pros And Cons Of Refinancing Second Mortgages
here are a number of pros and cons to consider when it comes to refinancing second mortgages.
Pros:
- Change your existing loan rate and term: If interest rates have dropped, you may want to consider refinancing to take advantage of new rates.
- Lower monthly payments: Lower interest rates may also mean lower monthly payments on your house.
- Allow you to switch to a fixed interest rate: This is good for those who are at a variable rate and would want a fixed rate due to rising interest rates.
- Consolidate debt: Refinancing your second mortgage will give you access to more funds, depending on your homes equity, that you can then use to consolidate high-interest debt, such as credit card debt or student loans.
Cons:
- Consider the extended life of the loan: If you refinance a second loan, you will usually be prolonging the life of the loan and, therefore, be making payments longer.
- Cost: Refinancing can be costly, as you will need to pay, at minimum, an appraisal fee, as well as closing costs.
Summary
Refinancing a second mortgage may be the right option for you if you are seeking a more favorable interest rate or lower monthly mortgage payments. Refinancing a second mortgage is similar to refinancing a first mortgage you will want to have a good credit score, employment history, and debt-to-income ratio to qualify for the best interest rates.
Talk to an expert before pursuing a refinancing of a second mortgage to ensure that it is the best choice for you.
How To Request Homeowner Assistance Funds
Homeowner Assistance Funds are in the process of being distributed to states for redistribution to homeowners. Treasury has provided guidance for states to use in developing their individual HAF plans.
You will request funds from your state once your state’s HAF plan has been approved and the system is up and running. Meanwhile, the National Council of State Housing Agencies’ Homeowner Assistance Fund webpage features a map showing the status of each state’s HAF to date.
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Relief Programs For Renters
Renters have protections during COVID, too, although theyre less robust than the relief programs offered to homeowners.
- Renters cannot be evicted until at least March 31, 2021, if they are behind on payments due to COVID-related financial hardship
- $25 billion in rental assistance will be available through state and local governments to help renters who cant make payments
To qualify for rent relief, tenants will have to meet certain conditions, including:
- The household cant make more than 80% of their areas median income
- Renters must be experiencing financial hardship related to the pandemic
- The renter must be at risk of losing their housing
Since funds will be distributed locally, tenants and landlords hoping to qualify for relief will need to check relief programs operating in their area.
For starters, check this spreadsheet of local housing programs, compiled by the National Low Income Housing Coalition, to find rental assistance programs currently operating in your state or county.
What to do if youre behind on rent
The National Low Income Housing Coalition has a lookup tool that can help renters find state and local assistance. But you must still keep in touch with your landlord if youre having trouble paying your rent.
Remember: If you forestall payments, theyll likely be due as soon as coronavirus troubles pass. So make sure you and your landlord are clear on two things:
Get the agreement in writing if possible.
Hardest Hit Fund Programs
The US Treasury administers the Hardest Hit Fund, which provides aid to the states that were most impacted by the economic crisis. Each of these states have local agencies that help homeowners in various ways, including mortgage payment assistance for the unemployed, principal reduction, and transactional assistance. This helps people either afford the homes theyre in, or move to more affordable housing.
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How To Request Mortgage Relief
Most help will be available only to those who ask for it. And the organization you need to ask at least, at first is your loan servicer. Thats the company to which you make your monthly mortgage payments.
Note: Your mortgage servicer is likely not the same company that set up your loan. To find out who your servicer is, check the company name and contact information on your most recent mortgage statement.
You should work with your loan servicer to discover programs that may help you.
Not all types of mortgages offer the same relief, and there may be state or local assistance you can tap.
But dont rely solely on the knowledge of the agent to whom you speak. Do some research of your own online. Youll find some links below. And Google could be your friend.
Contacting Your Loan Servicer
The company that processes your mortgage payments is known as the mortgage servicer. They are your first point of contact to determine if you qualify for the mortgage stimulus program. Find their number and email address on your statement. Contact them, and they will provide you with the name of the agency that backs your loan and their contact information. Your mortgage paperwork also contains that information.
Mortgage relief is available to those with mortgages backed by federal government agencies or government-sponsored agencies, such as Freddie Mac and Fannie Mae. Federal government agency loans, such as FHA, VA and USDA, have qualifying time frames in which to apply. As of this writing, there is no deadline for Fannie Mae or Freddie Mac. If you don’t have your mortgage through one of these agencies, you don’t qualify for federal stimulus for homeowners’ assistance, but check your states website. It may link to your states Coronavirus Relief Fund.
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During The Wait Forbearance Will Be Key
Graves recommends that homeowners in need call their lenders or servicers the companies that manage loans and send out statements to discuss options, including beginning or extending forbearance.
Forbearance allows you to postpone your mortgage payments without getting slammed with late fees or taking a hit to your credit score.
Those with federally backed loans some 70% of the U.S. mortgage population have been able to apply for forbearance in the pandemic. The deferred payments are typically tacked onto the end of the mortgage term. The enrollment window for forbearance was recently extended and now ends June 30.
If you’re in the remaining 30%, you dont have the same flexibility, Graves says. He suggests calling a housing counseling agency approved by the Department of Housing and Urban Development . Congress has provided $100 million so those agencies can assist homeowners.
Nearly 2 Million Americans Still Arent Paying Their Mortgages
As of July 20, 1.86 million borrowers remained in COVID-19 forbearance plans, according to mortgage data firm Black Knight. That number totals 3.5 percent of all active mortgages and fully 6.2 percent of FHA and VA loans. Meanwhile, the official unemployment rate stood at 5.9 percent in June.
Many homeowners will need deeper assistance due to pandemic-related income loss, Biden said in a statement. For example, due to the economic crisis caused by the pandemic, some homeowners are earning less than they were before the pandemic.
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Hopes For A Smooth Mortgage Aid Process
Graves says the closest example to the new mortgage aid program was an Obama-era plan created in response to the Great Recession. The “Hardest Hit Fund” was designed to assist the states hit hardest by the subprime lending crisis.
At that time, federal government also distributed the funds through each states housing agency. But there were challenges.
“It was done by the states in fits and starts. There were a lot of states that got a very slow start and tripped over themselves because this was new,” Graves says.
He hopes the rollout will be smoother this time: “Since this is similar, there should be some institutional knowledge in each of these state housing finance agencies so they can take their original programs and tweak them to match the current environment.”
How To Request Forbearance
As a homeowner with a federally-backed mortgage loan, you will need to contact your loan servicer to request forbearance. You do not need to submit extensive documentation, mainly only affirmation of your financial hardship, which can be done over the phone. Your initial forbearance can be for up to 180 days. Depending on when your initial forbearance began, you can extend forbearance an additional 180 or even 360 days.
Landlords of multi-family units must have been current on payments as of Feb. 1, 2020, to be approved for forbearance relief. If applicable, landlords should submit an oral or written request to their servicer who can approve the initial 30-day forbearance, with subsequent extensions of up to an additional 60 days.
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How To Refinance Second Mortgages
Refinancing a second mortgage requires almost the same steps as refinancing the first mortgage. In most cases, youll have to wait at least 12 months from when you were approved for the second mortgage before refinancing it. Most lenders also require you to have at least 20% equity in your home. If you plan to refinance with a different lender, you may want to check with the lender who holds your second mortgage before pursuing refinancing.
It may be slightly more difficult to find a lender, as refinancing second mortgages carries more risk for the lender. If for any reason your house is foreclosed, the second lender only gets whats leftover after the first lender is paid off. Nonetheless, if you have good credit, a stable income, and youve made your mortgage payments on time, you should be able to find a lender willing to help you refinance your second mortgage.
Before considering refinancing any mortgage, you should do your research, speak with your financial advisor, and calculate whether youll benefit financially by refinancing. Depending on the fees, the cost of refinancing a second mortgage may outweigh the benefits.
Once youve decided that refinancing your second mortgage is the right choice, figure out if you would qualify for favorable interest rates by checking your credit score and assessing your financial situation. Your lender may look at your other debts, so determine your debt-to-income ratio.
How To Get An Fha Cash
Do your research before you begin to consider an FHA cash-out refinance to make sure that you qualify and have everything required to apply.
Applying for an FHA cash-out refinance is similar to buying a home. There are similar considerations when it comes to credit, debt, and income, as well as an importance in budgeting and saving for the appraisal and closing costs in advance. This should be your first step in considering how much time you will need to prepare for an FHA cash-out refinance.
Take the time to bring up your credit score and save money for closing costs, if necessary. If you have a missed or late mortgage payment in the previous 12 months, you must wait until you have made 12 consecutive months of on-time payments to apply. Although FHA cash-out refinance loans are ideal for those with low credit, it is still a good idea to have a credit score of at least 600 before applying. Request copies of your credit reports if you suspect that your credit is not high enough.
Once youve decided that you would qualify for an FHA cash-out refinance, contact an expert before approaching your lender. Be sure to have your paperwork ready, including your current mortgage, documents outlining your other loans, as well as your income statements. Check with your lender to determine if you would require any additional documentation.
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How Much Can I Take Out With An Fha Loan
To figure out how much you can take out with an FHA cash-out refinance, you must be aware of your maximum loan-to-value ratio for an FHA cash-out loan, which is 80% for most homeowners.
This means that you can borrow as much as 80% of what your home is worth as long as you have at least 20% equity remaining.
Therefore, the amount of cash that you can take out depends on your equity. To get an estimate of how much you can take out, determine your equity, then subtract 20%. Factor in closing costs to get the best estimate.
Below is an example of an FHA cash-out refinance calculation:
Current Home Value: $400,000
Paying off Current Loan: -$250,000
Max FHA Cash Out: $70,000
In this example, the homeowners maximum FHA cash out is $70,000, minus closing costs.
This is the maximum in an ideal scenario, not factoring in credit scores or debt-to-income ratio, which could greatly affect the maximum amount you qualify to borrow.
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Don’t Just Stop Making Payments
If you are in a distressed situation, you may have more options than you realize. Whether your loan is backed by the federal government or a private lender, the one thing you should not do is to just stop making payments. You must contact your lender or servicer to let the company know you are having trouble making payments. Failure to contact your lender could result in many negative consequences such as additional charges, delinquent credit reports, and ultimately, possible foreclosure and eviction.
Is There Really A $3700 Mortgage Stimulus Program
Those $1,200 pandemic stimulus checks have ended, and are unlikely to return.
So what are all these ads for a new homeowners stimulus, that could provide more than $3,700 to pay your mortgage?
The ads are all over social media right now, many saying a new 2021 mortgage relief program is giving back $3,708 in savings to homeowners.
The headline on another says a new stimulus program is giving relief.
It even includes a picture of a TV anchorwoman reading this as breaking news.
But what TV station does she work for? It looks like CNN, but theres no logo on the screen.
The Better Business Bureau and AARP are warning about all these ads, saying there is no federal mortgage stimulus program.
States have some individual programs to help homeowners in distress, but that is not this.
And from the doesnt that stink file, what happens when you click to apply.
We tried to sign up, and got a series of screens asking for our address, homes value, and how much we owe on it.
In the end, it turned out to be a pitch for a refi program, which might save you $3,000, or not.
Its not a scam, but its not a $3,000 stimulus program, and that stinks.
The Better Business Bureau says there is no Congress-approved relief program for mortgage payments for Americans.
Finally, be careful of any offer for government help that takes you to a website that does not end in dot gov.
That way you dont waste your money.
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