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What Is Veterans Mortgage Relief Program

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For struggling homeowners with conventional or conforming loans, there are other relief options available.

For example, the Federal Housing Finance Agency announced a flex modification program earlier this year, which is designed for borrowers with Fannie Mae and Freddie Macowned loans.

The program offers borrowers a 20 percent reduction in their monthly principal and interest costs, as well as term extensions of up to 40 years. According to the White House, these FHFA options were the basis for the newly announced FHA, USDA, and VA relief programs.

This brings options for homeowners with mortgages backed by HUD, USDA, and VA closer in alignment with options for homeowners with mortgages backed by Fannie Mae and Freddie Mac, the administration said in a statement.

Can I Get A Certificate Of Eligibility For A Va Direct Or Va

You may be able to get a COE if you didnt receive a dishonorable discharge and you meet the minimum active-duty service requirement based on when you served.

When did you serve? You meet the minimum active-duty service requirement if you served for at least this amount of time:
When did you serve? Between August 2, 1990, and the present You meet the minimum active-duty service requirement if you served for at least this amount of time: 90 days of active-duty service
When did you serve? Any time period You meet the minimum active-duty service requirement if you served for at least this amount of time: 6 creditable years in the Selected Reserve or National Guard, and one of the descriptions below is true for youAt least one of these must be true. You:

  • Were discharged honorably, or
  • Were placed on the retired list, or
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable, or
  • Continue to serve in the Selected Reserve

Interest Rate Reduction Refinance Loans

If you have a VA home loan, you may be able to benefit from Interest Rate Reduction Refinance Loans, or IRRRLs, also known as VA streamline refinancing. If you are paying a high interest rate on your current VA loan, you can use IRRRLs to refinance to a lower rate. Even a one-point reduction can save you thousands throughout your loan term. IRRRLs can also be beneficial if your VA loan has an adjustable interest rate. In this case, you can switch to a fixed rate, which can stabilize your monthly payments.

IRRRLs are efficient because they require less paperwork than conventional refinances and usually do not require an appraisal. However, if you have a second, non-VA loan on your home, then you must have the lender agree to allow the VA loan to be the first mortgage listed.

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Mortgage Loan Relief For Conventional Mortgages

Conventional mortgages backed by Fannie Mae and Freddie Mac are mortgages that are guaranteed by a Government Sponsored Enterprise or GSE for short. Fannie and Freddie loans are considered GSE backed.

For these conventional loans, federal law under the CARES Act offered foreclosure avoidance protection until December 31, 2020. CARES Act protections also included the ability to apply for loan forbearance for up to 180 days initially with the option to request another loan forbearance period of 180 days. A deadline of December 31, 2020 was established for some transactionsthis is another mortgage relief option that was offered on a temporary basis.

But GSEs such as Fannie and Freddie have more permanent relief options. Freddie Mac and Fannie Mae loans offer the following relief options to help borrowers stay in their homes:

Conventional mortgage borrowers who have loans that are not Fannie/Freddie GSE mortgages must contact their conventional loan servicer to ask what relief options are open to them. These options are not standardized and may depend greatly on the willingness of your loan servicer to work with you and your circumstances.

Mortgage Relief Programs For Government Backed Loans: Va Fha Usda

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All the general options mentioned for conventional loans listed above are generally offered to those who have FHA, VA, or USDA mortgages. Government-backed loans generally require the lender to exhaust many options before resorting to a foreclosure. However, the borrower must contact the lender to work out these options, they are NOT automatic.

All lenders should consider some form of relief to a borrower in financial trouble working hard to save their home. In times of natural disaster, national emergency, etc. FHA mortgages, VA home loans, and USDA loans may have automatic procedures for borrowers who meet certain criteria such as having a home damaged by a natural disaster in a federally-declared disaster area an automatic foreclosure moratorium may be placed in effect for FHA loans, VA mortgages, USDA loans, etc.

However, borrower-lender cooperation is expected and required as early as possible to avoid complications and more costly remedies to cure the mortgage.

And then there is the option a borrower should also consider to solve problems requiring mortgage relief.

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Borrower Must Act To Claim Va Mortgage Relief

VA guidelines include instructions for borrowers on how to claim VA mortgage relief. The borrower is required to make the effort to contact their loan servicer:

A borrower with a VA-guaranteed or VA-held loan, including a Native American Direct Loan or a vendee loan, who is experiencing a financial hardship due, directly or indirectly, to the COVID19 emergency may request a loan forbearance.

This loan forbearance applies regardless of delinquency status. That means that even if you are convinced that you are about to lose your home, you should contact your lender to request loan forbearance.

Contact Your Lender To Get Home Loan Relief

Dont count yourself outlet the lender make the determination. But heres the key thing you need to knowif you do not contact your loan servicer you DO NOT have protection against VA mortgage default and foreclosure. You only get that by contacting the lender and making the arrangements. There is NO automatic mortgage bailout.The VA Home Loan offers $0 Down with no PMI. Find out if youre eligible for this powerful home buying benefit. Prequalify today!

Types Of Va Home Loans

There are several types of VA loans that are designed especially for the varying borrowing purposes listed above. These are:

  • VA purchase loans: A loan program that qualifying individuals use to buy, improve or build a home
  • VA cash-out refinance loans: A loan program that allows qualifying veterans, service members or surviving spouses to replace an existing loan with a new one, allowing them to borrow against equity in their home or refinance a non-VA loan into a VA loan
  • VA interest rate reduction refinance loan : A program that allows qualifying individuals to refinance your VA loan under new terms, potentially allowing you to reduce your monthly mortgage payments or interest rate.

There are both fixed-rate and adjustable-rate VA mortgages. With fixed-rate mortgages, you lock in your interest rate for the life of the loan. With adjustable-rate mortgages, your interest rate fluctuates according to the index of interest rates. The VA no longer prescribes specific interest rates adjustable-rate loan changes depend on whether the loan is a standard or hybrid adjustable rate mortgage. Be sure to talk with your lender about which option is best for you, and learn how often these rates are subject to adjustment.

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How Do You Get Mortgage Relief

To apply for any of these mortgage relief programs, youll need to get in touch with your loan servicer. Thats the company you send your mortgage payments to.

Your servicer is typically not the same lender you originally applied with . Not sure if you fall into that category? Use Fannie Maes and Freddie Macs loan lookup tools to check.

Additionally, theres still time to apply for mortgage forbearance if you havent yet done so.

FHA, VA, and USDA borrowers can sign up for a forbearance plan through September 30, while those with Fannie and Freddieowned loans have longer . In both cases, forbearance is available for up to 18 months total.

A final option to lower your mortgage interest rate and payments is a mortgage refinance.

Homeowners who are out of work or having financial difficulties may not qualify to refinance, in which case a loan modification may be the only option.

But for those who qualify, a refinance is typically the first plan of action. You can check your eligibility to refinance below.

Veteran Mortgage Relief With The Va Loan

Top 5 Benefits of the VA Home Loan Program

The U.S. Department of VeteransAffairs, or VA, provides home retention assistance. The VA intervenes whena veteran is having trouble making home loan payments.

The VA works with loan servicersto offer options to the veteran other than foreclosure.

In fiscal year 2019, the VA madeover400,000 contact actions to reach borrowers andloan servicers. The intent was to work out a mutually agreeable repaymentoption for both parties.

More than 100,000 veteranhomeowners avoided foreclosure in 2019 alone thanks to this effort.

The initiative has saved thetaxpayer an estimated $2.6 billion. More importantly, vastnumbers of veterans got another chance at homeownership.

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How To Refinance Second Mortgages Heres What You Need To Know

Many homeowners refinance their mortgage at least once during the lifespan of their loan. If you already have a second mortgage, you may not have considered the possibility of refinancing your second mortgage. Refinancing second mortgages may prove to be beneficial for homeowners who are looking for lower interest rates and monthly payments.

Refinancing a second mortgage is generally similar to refinancing the first mortgage, but there may be different reasons to refinance again.

If you want to learn about refinancing your second mortgage, then read on. Youll need to take some steps in order to refinance.

Spouses And The Va Mortgage Program

What spouses are eligible for a VA loan?

What if the service member passes away before he or she uses the benefit? Eligibility passes to an un-remarried spouse, in many cases.

For the surviving spouse to be eligible, the deceased service member must have:

  • Died in the line of duty
  • Passed away as a result of a service-connected disability
  • Been missing in action, or a prisoner of war, for at least 90 days
  • Been a totally disabled veteran for at least 10 years prior to death, and died from any cause

Also eligible are remarried spouses who married after the age of 57, on or after December 16, 2003.

In these cases, the surviving spouse can use VA loan eligibility to buy a home with zero down payment, just as the veteran would have.

VA loan benefits for surviving spouses

These spouses have an additional benefit, however. They are exempt from the VA funding fee. As a result, their loan balance and monthly payment will be lower.

Surviving spouses are also eligible for a VA streamline refinance when they meet the following guidelines.

  • The surviving spouse was married to the veteran at the time of death
  • The surviving spouse was on the original VA loan
  • VA streamline refinancing is typically not available when the deceased veteran was the only applicant on the original VA loan, even if he or she got married after buying the home.

    In this case, the surviving spouse would need to qualify for a non-VA refinance, or a VA cash-out loan.

    Qualifying if you receive child support/alimony

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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.

    How Do I Apply For A Va Loan

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    You can easily and quickly have a lender pull your certificate of eligibility to make sure youre able to get a VA loan.

    Most mortgage lenders offer VA home loans. So youre free to shop and compare rates with just about any company that catches your eye.

    Whats more, VA-specific mortgage lenders are actually some of the highest-rated on the market. Here are a few wed recommend checking out.

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    Step by Step Guide

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    Mortgage Relief During The Coronavirus Outbreak

    Homeowners with VA-guaranteed loans can get a COVID-19 forbearance, a temporary suspension of payments. But a forbearance isn’t the same as forgiveness, and you’ll eventually need to get caught up on those skipped amounts. On July 23, 2021, the White Houseannounced that VA borrowers that have been financially affected by COVID-19 have more options after a COVID-19 forbearance, including the following:

    COVID-19 Refund Modification. Borrowers might be eligible to get up to a 20% reduction in the principal and interest portion of their mortgage payments with a COVID-19 Refund Modification. Under the COVID-19 Refund Modification, VA can purchase a veteran’s past-due payments and amounts of unpaid principal, depending on how much assistance is necessary, subject to specific limits. The loan servicer will also modify the loan. Like with VA’s COVID-19 partial claim option , the veteran’s deferred indebtedness from a COVID-19 Refund Modification will be a junior lien on the property that doesn’t accrue interest, won’t require monthly payments, and only becomes due when the property is sold, the VA-guaranteed loan is paid off, or the VA-guaranteed loan is refinanced.

    Loan deferment. Under a loan deferment, the servicer defers repayment of the arrearages to the loan maturity date or until the borrower refinances the loan, transfers the property, or pays off the loan.

    Or you might be able to give up the property in a compromise sale or a deed in lieu of foreclosure.

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    Refinancing With A High Loantovalue

    Mortgage relief programs flip the rules around.

    Instead of staying under a maximum LTV ratio, your loan must be at or above a minimum LTV ratio.

    For instance, Fannie Maes HIRO program and Freddie Macs FMERR program could only be used with an LTV at or above 97.01 percent. That means the homeowner could only refinance if they had 3 percent equity or less in the home.

    The good news is, home equity has skyrocketed as bidding wars force home values up across the nation. That means current homeowners even those who arent planning to sell have seen their equity increase.

    The result is that highLTVs are no longer an issue for many Americans. With home values up, many owners are refi eligible they just dont know it yet.

    What If I Dont Meet The Minimum Service Requirements

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    You may still be able to get a COE if you were discharged for one of the reasons listed below.

    You must have been discharged for one of these reasons:

    • Hardship, or
    • The convenience of the government , or
    • Early out , or
    • Reduction in force, or
    • Certain medical conditions, or
    • A service-connected disability

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    Fmerr: The Freddie Mac Enhanced Relief Refinance

    Editors Note: Freddie Mac has paused its FMERR program effective August 31, 2021. The agency cited extremely low volume as a reason for pausing the program. We recommend that you check with a lender to learn whether youre refinance eligible. You may have more home equity than you realize thanks to rapidly rising home values across most of the nation.

    FMERR which stands for the Freddie Mac Enhanced Relief Refinance is Freddies version of a highLTV program.

    You can check Freddies loan lookup tool to see whether the agency owns your loan.

    Requirements to qualify for an Enhanced Relief Refinance include:

    • Your loantovalue ratio is at 97.01 percent or higher for a singlefamily, primary residence
    • Your loan was originated on or after November 1, 2018
    • Youve had the loan for at least 15 months
    • You have no late mortgage payments in the last 6 months, and no more than 1 in the last year

    The FMERR program can be used for existing fixedrate mortgages and adjustablerate mortgages.

    And, FMERR is not limited to singlefamily homes or primary residences. Homeowners with 2,3, and 4unit homes, as well as second homes and investment properties, can qualify as long as they meet other eligibility requirements.

    A mortgage lender can tell you whether you qualify for this refinance option. You do not have to refinance with your current lender.

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