On June 25, 2021, the Biden administration and the Federal Housing Finance Agency (FHFA) announced that the national foreclosure moratorium ends on July 31, 2021.

Foreclosure moratorium Illinois ends

However, many borrowers are still experiencing hardships related to COVID and remain seriously delinquent. The mortgage industry is anticipating a high volume of foreclosures and an overwhelming amount of assistance requests.

The Biden administration announced that HUD, VA, and USDA loans would take certain steps to prevent mass foreclosures until their borrowers are reviewed for affordable loss mitigation options. These servicers each implemented their programs for loss mitigation, payment reduction, or other programs to assist borrowers.

Likewise, the FHFA implemented plans for Freddie Mac and Fannie Mae borrowers to get evaluated for home retention solutions. Below you will find descriptions of the programs available to borrowers of each type of loan.

Remaining Foreclosure Relief Options

HUD Loans

Homeowners with HUD loans may be eligible for one or more of the following options:

  • Loan modifications—borrowers can move missed payments to the end of the mortgage;  
  • Payment reductions—up to 25% reduction in monthly principal and interest (P&I) payments;
  • COVID-19 Recovery Standalone Partial Claim (if the homeowner can resume payments)—loan for the unpaid payments with 0% interest, repaid when mortgage terminates after sale or refinance; or
  • COVID-19  Recovery Modification (if homeowner incapable of resuming payments)—extends loan term to 360 months and reduces P&I payments by 25%.

Homeowners have until September 30, 2021 to apply for forbearance. Borrowers can find more information about HUD loans and COVID relief here

USDA Loans

Homeowners with USDA loans may be eligible for the COVID-19 Special Relief Measure, which provides up to 20% reduction in monthly P&I payments and interest rate reduction. If that is not enough, the homeowner can also obtain a loan term extension. Finally, the homeowner may be able to obtain a 0% mortgage recovery advance loan that becomes due when the mortgage terminates.

USDA borrowers have until September 30, 2021 to apply for forbearance programs with their servicer. The USDA website has more information about USDA loans and COVID relief programs.

VA Loans

Homeowners with VA loans may be eligible for one or more of the following options for relief: 

  • COVID-19 Refund Modification—20% reduction in P&I payments;
  • COVID-19 Refund—VA provides loan for borrower’s COVID-related debts and up to 30% of the unpaid principal loan at 0% interest; or
  • Loan modification—up to 120 months of loan extension.

As with HUD and VA loans, borrowers have until September 30, 2021 to apply for forbearance programs. Borrowers should check out the VA home loan website for more information.

Fannie Mae/Freddie Mac Loans

  • Payment deferral—borrowers can defer up to 18 months of payments, which are due when the mortgage terminates; 
  • Loan modification—borrowers can receive up to 20% reduction in monthly P&I payments; or
  • Flex modification—eligible borrowers could capitalize all past-due amounts, extend their loan terms, obtain a lower interest rate, or receive a forbearance of the principle amount. 

Homeowners with Freddie Mac or Fannie Mae loans must already be on a COVID-related forbearance plan to be eligible for relief. Borrowers with these loans should consult with their servicers for more information about forbearance plans. 

Additional Protections

The Bureau of Consumer Protection also announced temporary safeguards to ensure borrowers have enough opportunities to be reviewed for loss mitigation before the servicer initiates foreclosure proceedings. Perhaps most importantly, lenders must make a sufficient effort to make borrowers aware of forbearance programs and expiration dates, as well as loss mitigation options.

Finally, eligible borrowers may avail themselves of federal financial assistance through their state housing authorities. The Illinois Housing Development Authority will receive federal funds from the Homeowner Assistance Fund created in the American Rescue Plan Act for homeowners still experiencing COVID-related hardships. Eligible homeowners could receive up to $25,000 in assistance. 

Vantage Group Legal Services Is Ready to Help 

If you are struggling with your mortgage payments the options can seem overwhelming. Vantage Group Legal Services can help you figure out the best solution for your situation. We specialize in foreclosure defense and offer affordable debt relief solutions for struggling Chicago homeowners. We can help keep you in your home and preserve your credit with expedited, affordable legal assistance. Contact us today to schedule your free consultation.

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