The White House announced new actions to help homeowners with government-backed loans, who have been impacted by the pandemic’s economic fallout, avoid foreclosure. These actions include requiring or encouraging mortgage servicers, when the federal agency has the authority and depending on the borrower’s financial conditions, to offer borrowers with government-backed loans new loan modification and payment reduction options.
As part of this effort, HUD, USDA and Department of Veterans Affairs (VA) will provide homeowners with loans backed by their respective agencies a 20–25 percent reduction in monthly principal and interest payments, which would help these borrowers remain in their homes and continue to build home equity. In addition, Ginnie Mae (the federal government corporation that guarantees the securities that underwrite mortgages), is creating a new security product for modified loans. This would enable government agencies that back loans to extend mortgage terms to up to 40 years, helping borrowers affected by the pandemic’s economic fallout reduce their monthly mortgage payments. These programs can be used in conjunction with the Homeowner Assistance Fund created in American Rescue Plan, which provides $9.961 billion to states, D.C., territories, and Tribes to assist homeowners impacted by the COVID-19 economic crisis with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes.