Mortgage Relief and Homeowner Assistance Programs in 2022

Is there a mortgage relief program in 2023?

With the impact of Covid waning, Congress has wound down much of its Covid-era mortgage relief.

But homeowners can still find help if they need it.

Mortgage relief can come in many forms. Whether you need a lower rate and payment or a break from making payments altogether, there are options. Here’s what to do.

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Mortgage relief programs for 2023

If you’ve had a temporary job loss or reduction in household income, it can be hard to keep up with mortgage payments.

Luckily, mortgage relief programs and refinance loans may be able to help. The right solution for you will depend on your current financial situation.

Five homeowner relief options in 2023 include:

1. Financial help from your state’s Homeowner Assistance Fund (HAF) program
2. Refinancing to a lower interest rate and/or extended loan term
3. Using a Streamline Refinance (no appraisal required)
4. Loan forbearance or loan modification
5. Working with a state housing counselor to find local assistance programs

Let’s take a closer look at each of those options.

The Homeowner Assistance Fund (HAF program)

The American Rescue Plan Act of 2021 created the Homeowner Assistance Fund (HAF) to help people struggling with their housing payments.

Eligible homeowners who receive money from the fund can use it to catch up on past-due mortgage payments. They can also pay other housing-related bills like homeowners insurance, property taxes, utilities, and even home repairs.

To be eligible for HAF funds, homeowners can’t earn more than 100% of the U.S. median income or 150% of their area’s median income — whichever is higher.

The Act set aside $10 billion for all 50 states, the District of Columbia, and other U.S. territories, such as Puerto Rico, to use for housing assistance. (The American Rescue Plan also set up a separate fund for rental assistance.)

Money in the Homeowner Assistance Fund comes from the U.S. Department of the Treasury, but states distribute funding on their own terms. Find your state on this page to see its eligibility requirements and find out whether its HAF program is still operating. Most states are still distributing money.

Refinance to lower your payments

For some homeowners, refinancing into a new mortgage can offer relief by reducing their monthly payments.

Granted, today’s higher interest rates make it harder to get a new loan with a lower rate. But even if you can’t lower your mortgage rate, extending your loan’s term could reduce your monthly payments. Just know you’d owe more interest in the long run in exchange for lower payments.

Refinancing with low equity

Home values skyrocketed in many areas over the past few years, leaving less than 2% of all mortgaged homes underwater. Even homeowners who made a very small down payment or refinanced recently could have enough equity to qualify for a refi.

What’s more, not everyone needs great credit or perfect finances to qualify for a refinance. Select programs, like the government-backed Streamline Refinance, can help borrowers refinance with little, no, or negative home equity.

Refinancing after forbearance

In the past, it could be difficult to refinance your home loan after having been in a forbearance plan. But those rules have loosened up due to the unprecedented spike in mortgage forbearance during the Covid pandemic.

Now, it’s possible for many homeowners to refinance as little as three months after ending their forbearance plans. Rules can vary by loan program and mortgage lender. So talk to a loan officer or mortgage broker to learn whether you’re refinance eligible.

Streamline refinancing for FHA, VA, and USDA loans

Homeowners with federally-backed FHA, VA, and USDA mortgages have access to different mortgage programs than those with conventional loans. Namely, they can use a Streamline Refinance.

The Streamline Refinance is similar to a mortgage relief refinance because you can use a Streamline Refi even if your primary residence has negative equity. (Some people call this being “underwater” on their loan.)

And a Streamline Refinance has other benefits, too.

• There’s less paperwork because you usually won’t have to re-verify your income and employment, or get the home appraised
• U.S. government-backed loans typically have below-market mortgage interest rates
• Closing costs are typically cheaper

Homeowners can qualify for an FHA Streamline if they’ve made at least three consecutive on-time payments on their existing FHA loan.

Even if you make your three consecutive payments while in forbearance, you may qualify for FHA Streamline refinancing. The Department of Housing and Urban Development (HUD), which oversees the Federal Housing Administration, is one of the more lenient housing agencies.

For a VA Streamline Refinance (also called the “IRRRL”), the rules are more lenient. You can use this refinance even if your current loan is delinquent. However, the lender must verify that the reason for delinquency has been resolved and you’ll be able to make payments on the new loan.

CARES Act mortgage relief programs (Covid-19 mortgage relief)

The CARES Act, which Congress passed in 2020, also included mortgage relief programs. Some of those provisions have expired. But if you need help, check with your loan servicer about these programs:

Mortgage forbearance

Loan forbearance temporarily pauses your monthly mortgage payments while you’re going through financial hardship. The debt isn’t forgiven — you’ll have to make up the missed payments after forbearance ends — but this can provide some breathing room while you get back on your feet financially.

Your current forbearance options depend on what type of mortgage loan you have, and whether you’ve used a forbearance plan previously.

• Conventional loans (backed by Fannie Mae or Freddie Mac) — If you have not yet requested forbearance, you can still do so. There is currently no deadline for requesting initial loan forbearance on conventional mortgages
• Government-backed loans (FHA, VA, or USDA) — If you have not yet requested an initial forbearance, you can still do so. Homeowners with loans backed by FHA, VA, and USDA can request forbearance for as long as the Covid-19 National Emergency is in effect. The current emergency declaration expires in January of 2023

Source: Consumer Financial Protection Bureau (CFPB)

Once your forbearance period expires, you’ll have a few options for how to exit forbearance and repay your missed loan payments.

Your loan servicer cannot ask you to repay everything as a lump sum right after exiting forbearance. It’s more likely you’ll pay the missed amount in installments along with your regular mortgage payments or defer repayment until you sell the home or refinance.

Loan modification

For homeowners who need to exit forbearance but don’t qualify for a refinance, another option could be a loan modification.

Modification is for homeowners who have had a permanent — rather than a temporary — change in their financial circumstances. This involves your loan servicer agreeing to lower your rate or extend your loan term to make the mortgage payments more affordable.

Homeowners with FHA, VA, and USDA loans might still be able to take advantage of Biden’s 2021 mortgage stimulus program that lowers payments by as much as 25% via a loan modification.

Loan modification is typically a last resort for homeowners who can’t refinance or take advantage of other mortgage relief programs.

State housing counselors can help

A HUD-approved housing counselor in your state may know about some mortgage relief solutions that are available in your community.

Counselors know about local government and non-profit agencies that can offer mortgage relief. In addition, HUD-approved housing agencies usually offer foreclosure prevention counseling for free.

You can find a housing counselor near you by searching the Consumer Financial Protection Bureau’s database.

Mortgage relief options from Fannie Mae and Freddie Mac

Homeowners with conforming loans — those backed by Fannie Mae or Freddie Mac — have specific options for mortgage relief.

If you’re experiencing a temporary hardship, it’s not too late to ask about forbearance. There’s currently no deadline to make an initial forbearance request with your loan servicer.

In addition, Fannie and Freddie offer expanded refi programs that make it easier and cheaper to lower your interest rate and mortgage payment.

Fannie Mae’s RefiNow and Freddie Mac’s Refi Possible are designed for low- to moderate-income homeowners. You might qualify if you make average or below-average income for your area.

These refinance programs have unique benefits that can offer financial relief to homeowners, including:

• Lower mortgage rate and monthly payment
• Reduced closing costs with no appraisal fee
• Easier debt-to-income qualification

These new loan options can offer big savings for homeowners who might not otherwise qualify to refinance.

You can check your area’s median income using Fannie Mae’s lookup tool and Freddie Mac’s lookup tool.

Mortgage relief refinance programs: HIRO and FMERR

Former relief programs from Fannie Mae and Freddie Mac, including the Enhanced Relief Refinance (FMERR) and the High-LTV Refinance Option (HIRO), have been paused due to a low number of applicants.

These programs were designed to offer mortgage relief to “underwater” borrowers — those who owe more on their mortgage than their home is worth. Thanks to rising home values nationwide, the number of underwater borrowers has shrunk dramatically.

As a result, many homeowners are eligible to refinance but just don’t know it yet.

So if you’re looking for a mortgage relief refinance, it’s still worth talking to a lender. There are a wide variety of refinance options available today, and you may well qualify for one of them.

Veteran mortgage relief options

One benefit of a VA loan is that the Department of Veterans Affairs can help you out if you’re having trouble making mortgage payments.

Veteran mortgage assistance comes in two forms:

1. You could use a Streamline Refinance Loan (IRRRL) to lower your rate and payment
2. You could get help from a VA loan professional to modify your repayment plan

If you’re underwater on a VA loan and need to refinance, you may be able to use the VA Streamline Refinance (IRRRL) to do so. Like other Streamline programs, the IRRRL requires no income or employment check, and skips the home appraisal — so your LTV won’t matter.

If you’re not sure whether a refinance is right for you, you might take advantage of the other VA relief program.

For VA loan holders as well as veterans with non-VA mortgages, the VA offers access to professional counselors who can help you if you’re having trouble making your payment. These people help veterans figure out whether they should refinance, try to restructure their loan, or take another measure to prevent foreclosure.

Even better, the VA’s “loan technicians” work with your lender on your behalf — so you don’t have to figure out all the logistics of a mortgage relief program yourself.

What is a mortgage relief refinance?

When most people think of government or Congress mortgage relief, they’re thinking of HARP — the Home Affordable Refinance Program. HARP was a government program rolled out by the Federal Housing Finance Agency in 2009. For nine years, it helped millions of homeowners refinance after being hard hit by the housing crisis.

The HARP program ended in 2018. And similar programs, including Fannie Mae’s HIRO and Freddie Mac’s Enhanced Relief Refinance, were also discontinued.

The reason? Home values have been rising dramatically.

Property values shot up at a record rate in 2020 and 2021. As a result, homeowners nationwide saw their equity levels increase. And the number of underwater borrowers shrunk to just 2% of the market.

There are still programs available to help homeowners with little or no equity, including 97% LTV refinancing from Fannie and Freddie and Streamline Refinancing from FHA, VA, and USDA. However, fewer and fewer homeowners need these programs.

Today, the focus is on helping homeowners who were impacted by Covid-19 or other financial hardships lower their mortgage payments.

Do you qualify for a lower interest rate?

Refinancing can offer relief from high mortgage payments. If you got your mortgage in 2020 or 2021, when rates were historically low, you’ll probably have a hard time beating that rate now.

But there’s more to your mortgage rate than market conditions. Your personal finances also affect how much interest you pay.

If you’ve recently increased your credit score or household income, you might qualify for a better refinance rate. Paying off student loans or credit cards since your current loan closed could also help.

By lowering your mortgage interest rate and/or extending your loan term, you can typically reduce your monthly mortgage payment and take some pressure off your budget.

Qualifying for a refinance

To qualify for a refinance, you’ll need to meet some basic criteria. But these can be very flexible depending on the loan program.

Conforming loan refinance requirements:

• Credit score of 620 or higher
• No missed mortgage payments in the last year
• Loan-to-value ratio (LTV) of 97% or less
• Debt-to-income ratio of 65% or less with RefiNow or Refi Possible

Streamline Refinance requirements:

• Your current loan is backed by FHA, VA, or USDA
• No missed mortgage payments in the last year
• Debt-to-income ratio requirements are flexible
• Credit score requirements are flexible
• No appraisal required, so there’s no maximum LTV

If you’re not eligible to refinance, don’t worry. You may have other options.

Forbearance is still available to many homeowners who need temporary mortgage relief due to a job disruption or other financial hardship. And loan modification may be available to those with longer-term relief needs.

Reach out to your mortgage lender or loan servicer to learn more. Your loan advisor will help you understand the types of relief available and which one is right for you.

Watch out for mortgage relief scams

Unfortunately, scammers tend to target people who are worried about defaulting on their mortgage. Homeowners should be on the lookout for unsolicited offers and deals that sound too good to be true.

Benefit programs, especially federal benefit programs, should never ask you, the homeowner, for money upfront. If you’re suspicious of a website, report it to the Consumer Financial Protection Bureau.

As you check out federal or state programs, remember that “.gov” at the end of web and email addresses usually means the site is affiliated with the government. Addresses with “.com” or “.net” are less likely to be government operated sites.

If you’re refinancing but not sure which lender to work with, avoid responding to unsolicited offers from lenders. Instead, choose refinance lenders based on your own terms.

Mortgage stimulus programs FAQ

Check your mortgage relief options in 2023

Homeowners struggling with their mortgage payments can seek help from mortgage relief programs, or they can try to refinance into a new mortgage with lower payments.

Considering a refinance? Run some numbers with our mortgage calculator first. If you’re not sure about your current mortgage balance and interest rate, check your most recent mortgage statement.

If you think a new loan could save you money each month, get quotes from at least three lenders so you can compare interest rates and fees.