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 mortgage assistance if they need it.
Mortgage relief comes 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.Verify your refinance eligibility. Start here
In this article (Skip to...)
- New deferral policy
- Relief programs
- Homeowner Assistance Fund
- Refinance options
- COVID mortgage relief
- Housing counselors
- Fannie Mae/Freddie Mac
- Veteran mortgage relief
- Mortgage relief scams
- Mortgage relief FAQ
New payment deferral policy for 2023
The Federal Housing Finance Agency (FHFA) announced in late March 2023 that Fannie Mae and Freddie Mac would enhance their payment deferral policy to allow borrowers facing financial hardship to defer up to six months of mortgage payments.Speak with a lender to explore your options. Start here
This newly implemented payment deferral option will allow eligible borrowers to keep the same monthly mortgage payment by moving past-due amounts to the end of the loan as a non-interest-bearing balance. These would be due and payable at maturity, sale, refinance, or payoff.
Fannie Mae and Freddie Mac will work with loan servicers to implement the enhanced payment deferral policy, which has a voluntary adoption date of July 1, 2023, and a mandatory adoption date of October 1, 2023.
If you are facing financial hardship, contact your loan servicer to discuss whether this is a suitable solution for your circumstances.
Mortgage assistance 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 assistance programs and refinance loans can help. The right solution for you will depend on your current financial situation.Talk to a lender about your options. Start here
Five homeowner relief options in 2023 include:
- Financial help from your state’s Homeowner Assistance Fund (HAF) program
- Refinancing to a lower interest rate and/or extended loan term
- Using a Streamline Refinance (no appraisal required)
- Loan forbearance or loan modification
- Working with a state housing counselor to find local assistance programs
Let’s take a closer look at each of those options.
1. Homeowner Assistance Fund (HAF program)
The American Rescue Plan Act of 2021 created the Homeowner Assistance Fund (HAF) to provide federal assistance to 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. These include homeowners insurance, property taxes, utilities, and even home repairs.Speak with a lender to explore your options. Start here
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, for housing assistance. (The American Rescue Plan also set up a separate fund for rental assistance.)
The money for the HAF program comes from the U.S. Department of the Treasury. However, states distribute funding on their own terms.
The Homeowner Assistance Fund has ended in most states. However, there are a few states that still have financial aid available. Find your state to see its eligibility requirements and to determine whether or not it’s still distributing money.
2. Refinance to lower your payments
For some homeowners, refinancing into a new mortgage can offer relief by reducing their monthly payments.
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 that you’d owe more interest in the long run in exchange for lower payments.Verify your refinance eligibility. Start here
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 being in a forbearance plan. But those rules have loosened up. This is due to the unprecedented spike in mortgage forbearance during the COVID pandemic.
Now, it’s possible for many homeowners to refinance in as little as three months after ending their forbearance plans. Application guidelines can vary by loan program and mortgage lender. So talk to a loan officer or mortgage broker to learn whether you meet the eligibility requirements.
3. 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.)Verify your Streamline Refinance eligibility. Start here
And a Streamline Refinance has other benefits, too.
- There’s less paperwork. 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 that you’ll be able to make payments on the new loan.
4. CARES Act mortgage assistance programs (COVID-19 mortgage relief)
The CARES Act, which Congress passed in 2020, also included mortgage assistance programs. Some of those financial recovery provisions have expired. But if you need help, check with your loan servicer about these mortgage relief programs:Talk to a lender about your options. Start here
Loan forbearance temporarily pauses your monthly mortgage payments while you go through financial hardship. The debt isn’t forgiven — you’ll have to make up the missed payments after forbearance ends — but this payment suspension 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 expired in January 2023
Source: Consumer Financial Protection Bureau (CFPB)
Once your loan 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 in a lump sum right after exiting forbearance. You’ll likely pay the missed amount in installments along with your regular mortgage payments or defer repayment until you sell the home or refinance.
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, which lowers payments by as much as 25% via a loan modification. However, at this point in 2023, availability is very limited for vulnerable populations.
Loan modification is typically a last resort for homeowners who can’t refinance or take advantage of other mortgage relief programs.
4. State housing counseling agencies
A HUD-approved housing counselor in your state may know about some mortgage assistance programs 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.Talk to a lender about your options. Start here
You can find additional information about housing counseling near you by searching the Consumer Financial Protection Bureau’s database.
5. 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.Verify your refinance eligibility. Start here
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. These can make it easier and cheaper to lower your interest rate and mortgage payment.
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.
Veteran mortgage relief options
One benefit of a VA loan is that the Department of Veterans Affairs can help you if you’re having trouble making mortgage payments.Verify your Streamline Refinance eligibility. Start here
Veteran mortgage assistance comes in two forms:
- You could use a Streamline Refinance Loan (IRRRL) to lower your rate and payment
- 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 and veterans with non-VA mortgages, the VA offers access to professional counselors. They can assist you if you’re having trouble making your payment. They also help veterans figure out whether to 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.
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 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. You may well qualify for one of them.
What is a mortgage relief refinance?
When most people think of government or congressional mortgage relief, they think of HARP — the Home Affordable Refinance Program. The Federal Housing Finance Agency introduced HARP as a government initiative in 2009. After the housing crisis severely impacted them, it assisted millions of homeowners in refinancing for nine years.
The HARP program ended in 2018. And similar programs, including Fannie Mae’s HIRO and Freddie Mac’s Enhanced Relief Refinance, were also discontinued.Verify your refinance eligibility. Start here
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 shrank to just 2% of the market.
There are still programs available to help homeowners with little or no equity. These include 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 impacted by COVID-19 or other financial hardships through mortgage payment assistance programs.
Do you qualify for a lower interest rate?
Refinancing can offer relief from high mortgage payments. If you were a homebuyer 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 (DTI) 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 modifications 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.Talk to a lender about your options. Start here
Benefit programs, especially federal ones, 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. Instead, choose refinance lenders based on your own terms.
Contact your lender about mortgage relief
If you’re worried about paying your mortgage, reach out to your lender directly for mortgage relief, regardless of the loan type or any available government assistance.
Don’t hesitate to call even before you miss a payment. Taking early action can likely provide you with more mortgage relief options. If you’ve already missed a payment and request forbearance, be aware that the delinquency might reflect on your credit report, lingering until you bring the loan current again.
When reaching out to your lender, make sure you have the following at hand:
- Your current income estimate and anticipated future income if you expect changes
- A summary of your current monthly expenditures
- The latest mortgage statement
- Any documents that explain changes in your financial situation
Be cautious of third parties that offer mortgage assistance and seek help directly from your lender instead. If you need guidance on speaking with your lender, you can find a HUD-approved financial counselor on the HUD website. They provide assistance at no cost and can equip you to have a more effective conversation with your lender.
For detailed information on the programs mentioned above, you can also visit the Consumer Financial Protection Bureau website. Remember, your lender is the primary source for mortgage relief, so don’t hesitate to contact them if you need help.
Mortgage stimulus programs FAQ
The Homeowner Assistance Fund (HAF) is still helping eligible homeowners in 2023 who need mortgage relief. Under the American Rescue Plan, the HAF was funded with at least $50 million for each state to assist homeowners in danger of foreclosure or housing instability. Talk to your loan servicer about your HAF eligibility.
There is not currently a GSE rescue package for homeowners. However, Fannie Mae and Freddie Mac (the “GSEs”) both have options to help homeowners struggling with their mortgage payments. To find out whether you qualify for mortgage assistance, reach out to your mortgage loan servicer. That’s the company to which you make your payments.
Even though the COVID pandemic is waning, many homeowners can still take advantage of COVID-era relief programs. If you have a conforming mortgage or a government-backed mortgage, it’s not too late to request an initial loan forbearance and pause your payments if you’re going through a temporary financial hardship and need help avoiding mortgage delinquencies. Ask your loan servicer about forbearance options.
The CARES Act and subsequent American Rescue Plan provided mortgage relief during the COVID-19 pandemic. These programs do not refinance your mortgage. But they may let you postpone repayment while keeping your loan active or receive money to use on housing expenses.
President Joe Biden has proposed several stimulus programs to help with homeownership costs. In terms of mortgage relief, he enacted a measure in 2021 to provide mortgage assistance to homeowners with federally backed FHA, VA, and USDA loans. Under this program, qualified borrowers can modify their mortgages to get a lower interest rate and potentially reduce their loan payments by up to 25%. Contact your mortgage servicer to learn whether you’re eligible for a loan modification.
The Freddie Mac Enhanced Relief Refinance (FMERR) is currently on pause due to a low volume of applicants. FMERR was meant to help homeowners refinance with very little home equity. But, due to rising home values, many U.S. homeowners have enough equity to refinance without needing a special, high-LTV program.
No, the HARP program is no longer available. HARP, the Home Affordable Refinance Program, expired in 2018. You can no longer apply for or be accepted for this mortgage relief program.
Yes, the VA can help veterans and service members who are struggling to make mortgage payments. The association provides housing counselors who will help you figure out the right course of action and work with your mortgage servicer to get your payment plan back on track. Even if the Department of Veterans Affairs is not backing your current mortgage, the VA can help with payment problems.
Check your mortgage assistance options in 2023
Homeowners struggling with their mortgage payments can seek help from mortgage assistance programs or 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 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.Time to make a move? Let us find the right mortgage for you