Nearly Two Million U.S. Homeowners Assisted By HUD During the Pandemic

Mortgage News February 22, 2023

According to the U.S. Department of Housing and Urban Development (HUD), almost two million homeowners with FHA mortgages were able to stay in their homes from March 2020 through December 2020 due to Federal Housing Administration (FHA) programs.

As a result of the pandemic, some FHA borrowers found it difficult to make their mortgage payments. To avoid foreclosure, they applied for COVID-19 forbearances or more permanent solutions, such as loan modifications.

FHA recently announced the extension of its COVID-19 toolkit for at least the next 18 months to assist all eligible borrowers facing foreclosure, regardless of their circumstances.

HUD Secretary Marcia L. Fudge said that in spite of the end of the pandemic, the effects on the economy will continue for some time. As a result of these powerful tools, struggling homeowners will have the chance to avoid foreclosure and get back on their feet. Since these tools have already proven successful, FHA worked to enhance them further and expand their use.

Additionally, these new enhancements will also raise the limit on how much interest-free arrearages borrowers can pay at the end of their mortgage term so that, despite higher interest rates, more borrowers will be able to keep their homes. The changes are mandatory to take effect on April 30, 2023, although mortgage servicers may start offering them earlier than that.

A total of 1,845,000 mortgage holders have entered into agreements with their mortgage servicers to pause or reduce their payments (forbearance) due to the pandemic over the past two years.

Approximately 1.8 million FHA borrowers received forbearances due to hardships caused or exacerbated by COVID-19, according to HUD. More than one million of these borrowers have received plans to help them remain in their homes by lowering their monthly payments or participating in other home retention options. Furthermore, 691,000 homeowners have cured their mortgages or paid them off without a loss mitigation plan.

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