That’s the reduction some homeowners will see in their mortgage payments, after the federal government announced new programs aimed at preventing people from losing their homes once a ban on foreclosures ends next week.
The new relief programs apply to mortgages backed by three federal agencies—the departments of Housing and Urban Development, Agriculture, and Veterans Affairs, according to a statement released by the White House Friday. The new policies will allow homeowners to reduce their monthly principal and interest payments by as much as 25%, in part by extending the length of their mortgages at current, historically low interest rates. The measures are similar to what the Federal Housing Finance Agency already has provided for mortgages backed by Fannie Mae and Freddie Mac.
A federal moratorium on foreclosure expires July 31, and the administration of President Joe Biden has said it won’t extend the protections any longer, despite foreclosure still being a concern for some households. About 1.1 million of the 5.9 million people who reported being behind on mortgage payments said they were “somewhat” or “very” likely to lose their home to foreclosure in the next two months, according to a Census Bureau survey taken June 23 through July 5.
However, borrowers with mortgages backed by the federal government can still enroll for forbearance—that’s when a borrower is allowed to temporarily stop making payments—through Sept. 30. About 1.75 million people in the U.S. remain in forbearance programs, the White House statement said, down from the nearly 7.2 million households that have taken advantage of forbearance since last year.
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