The pandemic is changing the future of HUD home financing. Emergency mortgage relief programs were set into place in 2020 to help homeowners affected by the pandemic. Now, the Department of Housing and Urban Development is deciding which programs they will keep permanently.
What Changes Will We See in HUD Home Financing in the Future?
The COVID-19 pandemic affected home financing in numerous ways. During the crisis, the HUD set many changes into motion to help homeowners who had been financially affected by the pandemic. For many, this made the difference between being able to keep their home and sudden foreclosure or homelessness. Now, experts are saying some of these changes may stick around. Here’s what HUD home financing is expected to look like in the future.
Pass-Through Assistance Program
Ginnie Mae (Government National Mortgage Association) is a government corporation within the (HUD). Ginnie Mae backs loans made through the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), the U.S. Department of Agriculture (USDA), and the Office of Public and Indian Housing (PIH). At the start of the pandemic, Ginnie Mae expanded their Pass-Through Assistance Program (“PTAP”) to assist issuers with providing borrower relief efforts, including forbearance. Use of the program was limited, but it was still a great success. For this reason, Ginnie Mae says they intend to keep it for future use.
Expanded FHA Modifications
During the pandemic, the FHA expanded modifications for borrowers experiencing financial distress due to COVID-19. Homeowners were able to enter into and extend their mortgage forbearance, giving them extra time to recover financially from the global event. Right now, the FHA is still waiting to see how these modifications perform since forbearance exits are still ongoing. But the plan is to review them to see which ones were most successful and can be made permanent.
40 Year Mortgage Option
Currently, the FHA is considering expanding its COVID-19 loss mitigation program to include a 40-year loan modification. The idea is that extending loan terms to 40 years would result in reduced monthly payments. This may make it easier for borrowers affected by the pandemic to afford their monthly mortgage payments. It is uncertain at this point whether or not this change will go into effect.
The COVID-19 pandemic brought about unprecedented changes in HUD home financing. The government launched emergency relief programs to assist homeowners during this difficult time. Now, government agencies are considering making some of these changes permanent. However, only time will tell what the future of home financing will be. But most likely, any changes made will be to the benefit of borrowers. In the meantime, we’ll just have to hang tight and see how these changes play out.
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