The Federal Housing Finance Agency (FHFA) recently announced that it will expand its loan payment deferral program in order to help protect borrowers from financial hardship during the COVID-19 pandemic. This payment deferral program was created to offer assistance to those who have been adversely affected by the coronavirus crisis, and are struggling to make their monthly mortgage payments.

Through the expanded relief options, homeowners that are financially affected by COVID-19 can elect one of two options: Loans can be deferred up to a maximum of 12-months, with interest capitalized into the loan balance at the end of deferral period; or, loans can be modified with up to 120-months of a fixed, interest-only payment with principal forgiveness. To qualify, borrowers must provide documentation of some form at least financial hardship relating to COVID-19.

The FHFA emphasized that the payment relief options are optional, and all borrowers’ payment plans will be able to be modified or deferred, as long as they meet the eligibility criteria. All borrowers will also retain their current loan incentives, such as Principal Reduction Modification or Home Affordable Modification Program incentives, as well as all existing protections provided under the Servicemembers’ Civil Relief Act, Fair Credit Reporting Act, and state and federal laws related to loss mitigation.

The payment deferral available through the FHFA’s program is expected to provide much needed financial relief for many homeowners that have been significantly impacted by the COVID-19 pandemic. The program will also preserve their current mortgage terms, including interest rate and other conditions, while providing flexibility to help them stay in their homes.

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