Administration Unveils Plan to Cut Payments on Government Backed Loans Up to 25%
The Biden administration has announced new loan modification options for borrowers who have government-backed home loans in order to help home owners who are still struggling to make their mortgage payments due to the COVID-19 pandemic.
Under the plan, those with Federal Housing Administration (FHA)-insured mortgages who have been financially impacted by the COVID-19 crisis will be eligible to receive up to a 25% reduction on their principal and interest (P&I) payments. In return, the life of their mortgage payments will be extended to allow for the lower monthly payments.
The COVID relief measures for borrowers with loans backed by the Department of Agriculture include up to a 20% reduction in monthly P&I payments. New options include an interest rate reduction, term extension and a mortgage recovery advance, which can help cover past due mortgage payments and related costs.