WASHINGTON – The Biden administration announced Friday it is putting in place new loan modifications and payment reductions to help homeowners who have fallen behind on their mortgage payments during the coronavirus pandemic.
The modifications are aimed at staving off a wave of foreclosures and will allow homeowners with federally backed mortgages to extend the life of their loans and reduce their interest rates. The measures will apply to those who cannot afford to resume their monthly mortgage payments.
According to the White House, the assistance program will provide homeowners with a roughly 25% reduction in borrowers’ monthly principal and interest payments. The program benefits homeowners with loans backed by one of three federal agencies:Housing and Urban Development, Agriculture or Veterans Affairs. The changes are similar to earlier loan assistance made available to Americans who have mortgages from Fannie Mae and Freddie Mac.
Homeowners who cannot resume their current monthly mortgage payments also can extend their loan to 360 months at the market rate, according to a White House fact sheet released on Friday.
Right now, borrowers who hold federally backed mortgages can delay payments for up to 18 months .
The mortgage assistance comes as federal protection for renters behind on their monthly payments is scheduled to expire at the end of the month.
In June, the Centers for Disease Control and Prevention extended for 30 days a moratorium on evictions for renters unable to make their housing payments. The moratorium, based the public health threat posed by COVID-19, prevents tenants who are behind on rent from being evicted. It does not forgive overdue rent , leaving millions of families behind on payments.
Those renter protections are scheduled to expire on July 31.
This article originally appeared on USA TODAY: COVID-19: Biden offers new aid for homeowners at risk of foreclosure