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The American Rescue plan was the first priority for President Biden when he took office. A Democratic majority was able to pass the bill despite Republican dissent, and the new stimulus and relief package went into effect in March of 2020. One of the new programs that was created by this legislation is the $10 billion Homeowner’s Assistance Fund.
The $10 billion will be distributed to the states, who will then be responsible for giving funds to struggling home owners. These funds can be used to pay for any type of bill necessary to keep their home out of foreclosure. HOA fees, utility bills, and insurance premiums are examples of acceptable expenditures.
The funds will be made available to home owners in all 50 states, native tribes, and US territories. Holders of non-traditional mortgages such as land contracts, reverse mortgages, and owner-financing are all eligible for assistance.
In addition to the direct assistance fund, new loan modification options are being offered for USDA, VA, and FHFA mortgages. The new modification options must be offered to all loan holders and will reduce monthly payments by approximately 20%.
If modification and direct assistance can’t save a home from foreclosure, forbearance is still an option. The enrollment deadline for mortgage forbearance programs has been extended to September 30th, 2021. The mortgage forbearance program allows the homeowner to add the missed payments to the end of the loan, extending the lifespan of their mortgage.
Ginnie Mae, the Government National Mortgage Association, has also announced that they are releasing an new 40 year modified loan option that would significantly reduce monthly payments. This option should become available this fall.