COVID-19 Mortgage Relief Options After the Pandemic

Read Time: 9 minutes

Although many of the impacts of the COVID-19 pandemic have passed, some people are still struggling financially due to permanent job loss or ongoing health issues. Homeowners have not been immune to financial impacts, and for them, the stakes are high as they struggle to find ways to retain their homes in the face of long-term challenges.

In response, private lenders, federal and state agencies, and government-sponsored enterprises (GSEs) that buy and insure mortgages developed programs to provide mortgage relief options to affected homeowners.

While some of the program deadlines have passed, many are still active and continuing to assist homeowners in need. If you’re worried about paying your mortgage or repaying a forbearance, a mortgage relief program may be able to help.

Relief Options Depend on Your Type of Loan

Your kind of mortgage may determine what types of assistance are available to you.

  • GSEs Fannie Mae and Freddie Mac handle conventional loans.
  • The Federal Housing Administration insures FHA loans.
  • The Department of Veterans Affairs guarantees VA loans.
  • The Department of Agriculture offers USDA loans.

You can check with your lender to determine if your conventional mortgage is owned by Freddie Mac or Fannie Mae using agency loan look-up tools.

You can verify whether you have an FHA, VA, or USDA loan by reviewing your closing documents and looking at the Closing Disclosure, which will detail loan information to give you the answer you need, or by reviewing your monthly mortgage statement. 

Call your lender to discuss relief options regardless of which agency owns your loan. Each has programs in place, some designed to offset pandemic impacts, and others in place on an ongoing basis.

You don’t have to wait until you are delinquent on your mortgage, and if you reach out before you miss a payment that may qualify you for more mortgage relief options.

You may also be eligible for forbearance or help from the American Rescue Plan’s Homeowner Assistance Fund. The HAF earmarked almost $10 billion to relieve homeowners affected by the pandemic.

It provides funds for mortgage assistance, homeowners insurance, utility bills, homeowners association fees, and more.

Scams involving mortgage relief are common, which is why you should work with your lender and not third parties.

You can get advice about talking to your lender with the help of a HUD-approved financial counselor. These counselors offer no-cost assistance and can help you be better prepared to call your lender.

Forbearance Programs

Forbearance is an assistance program for homeowners that pauses or reduces your mortgage payment. When you end your forbearance plan, you’ll need to pay the past-due amount plus accrued interest, apply for other programs your lender may offer, or see if you can extend the forbearance period.

Normally, forbearance lasts 3-6 months, but longer periods have been made available to homeowners dealing with financial issues during this pandemic.

Lump sum repayment at the end of forbearance is often called a “balloon payment.” If that doesn’t sound feasible, try to negotiate for another option.

Fannie Mae and Freddie Mac, the FHA, VA, and USDA have required lenders to offer options to borrowers other than lump-sum repayment using COVID-19 forbearance. These agencies have also barred lenders from charging added fees, interest, and penalties that would otherwise have accrued.

Lenders shouldn’t report forbearance to the credit bureaus. Since the lender has agreed to allow you to skip those payments, they don’t count as missed payments and should not be reported to credit bureaus.

However, if you’re already behind on payments when you request forbearance, that delinquency may show up on your credit report until you’re current with your mortgage payments.

Freddie Mac and Fannie Mae Mortgage Forbearance

Conventional loan borrowers are eligible for up to 12 months of forbearance. At the end of the forbearance term, if you can resume regular mortgage payments but can’t pay anything additional, you may be eligible for COVID-19 Payment Deferral.

With that deferral, the forbearance amount won’t accrue interest and would not be due until the end of the mortgage, whether you sell, refinance, or pay off the loan.

If you’re not eligible for a deferral or can’t resume regular mortgage payments, the FHA discourages lenders from pursuing foreclosure. As an alternative, you may be considered for a loan modification.

Freddie Mac and Fannie Mae offer Flex Modification, which can reduce your monthly mortgage payment amount by up to 20% by rolling missed or forborne payments into the total loan amount and extending the mortgage term. 

The FHA deadline for requesting COVID-19 forbearance was May 31, 2023. If you missed the window for COVID-19 forbearance, the FHA also has several mortgage relief programs in place, including standard mortgage forbearance lasting up to six months and special forbearance for unemployment.

If you can’t resume your regular home loan payments at the end of your FHA forbearance term but cannot repay some or all of the missed payments, you may be eligible for HUD’s COVID-19 Recovery Standalone Partial Claim. This is a no-fee, no-interest junior lien that doesn’t have to be paid back until you sell your home, pay off your mortgage, or otherwise end the loan.

The FHA offers COVID-19 recovery options to borrowers on a COVID-19 forbearance or borrowers who did not participate in a COVID-19 forbearance 90 days or more delinquent through October 30, 2024.

COVID-19 Advance Loan Modification (ALM) and Recovery Modification Options

If you reach the end of your FHA forbearance or are 90 or more days delinquent on your FHA loan and you meet certain eligibility requirements, your mortgage servicer is required to offer you a COVID-19 Advance Loan Modification (ALM). This is a 30-year modification that will make your loan current and reduce your monthly principal and interest payment by at least 25%. 

And, no matter how far along you were with your existing loan, you’ll start over with a new 30-year term.

FHA borrowers who cannot resume their loan payments at the end of their forbearance may be eligible for the COVID-19 Recovery Modification. Like the ALM, this modification should reduce your principal and interest payment by at least 25%. Any amount you were unable to pay gets added to your loan balance, increasing the principal amount you owe. 

To keep the payments manageable, your loan will be re-amortized, so you’ll start over with a new 30-year or possibly a 40-year loan. The Recovery Modification can also be combined with a Partial Claim. 

VA COVID-19 Loan Assistance

The initial VA COVID-19 forbearance application deadline was May 20, 2023. 

The VA offered borrowers a six-month forbearance, which could be extended another six months. For those who took advantage of this program, the VA offers other options when forbearance expires, including the VA Disaster Extend Modification.

This program is available if you can make regular mortgage payments but can’t repay your forbearance.

USDA COVID-19 Loan Assistance

If the USDA Rural Housing Service backs your mortgage, the deadline to apply for initial forbearance was May 31, 2023. If your USDA forbearance is ending and you can’t resume monthly loan payments, you may be eligible for USDA COVID-19 Special Relief Measures. 

This is a loan modification that reduces your monthly mortgage payment by up to 20%. Your servicer will work with you to reduce your interest rate, and if you need more help, you may be able to extend your term as well.

Borrowers may also be considered for a Mortgage Recovery Advance that provides funds to help cover past-due payments and other costs that do not have to be repaid until the end of the loan.

Assistance for Other Types of Mortgages

Mortgages for self-employed borrowers, non-U.S. citizens, or borrowers who have experienced a foreclosure and don’t meet Freddie Mac and Fannie Mae’s standards are not covered by government relief programs. Individual lenders may have their own in-house assistance programs, and you’ll need to contact them directly to explore your options.

American Rescue Plan Homeowner Assistance Fund

In addition to the programs already mentioned, the American Rescue Plan created the Homeowner Assistance Fund. This fund dedicated nearly $10 billion to providing relief to homeowners affected by the pandemic, including mortgage payments and other homeowner-related costs. 

Funds are distributed through state, territorial, and tribal governments. In many areas, eligible homeowners can use HAF funds in addition to the forbearance and loan modification programs described above. 

If permitted by your state’s HAF program, funds may be used with the FHA’s COVID-19 Loss Mitigation Options for single-family mortgages and may also be used to reduce the balance or pay off a borrower’s outstanding home retention Partial Claims, including for borrowers whose mortgage payments are now current.

Homeowners will need to meet eligibility requirements, including an income limit and an experience of financial hardship due to the pandemic, and the funds can be applied to primary residences only.

Only some states are currently accepting applications. You can check your state or territory’s status with an interactive map on the website of the National Council of State Housing Agencies.

For more information about HAF, visit Treasury’s HAF web page.

COVID-19 Home Disposition Options

If you don’t qualify for a COVID-19 Recovery Home Retention Option or indicate that you are unable to resume making the monthly or modified monthly mortgage payment, you must be reviewed for the following COVID-19 Home Disposition Options. These include:

COVID-19 Pre-Foreclosure Sale (PFS)

If the property sales value is not enough to pay the loan in full, your servicer may be able to accept less than the full amount owed by approving you for a pre-foreclosure sale, also known as a short sale.

COVID-19 Deed-in-Lieu (DIL) of Foreclosure

If you can’t complete a COVID-19 PFS transaction at the expiration of the PFS marketing period, you may be able to voluntarily offer to deed back your property to HUD in exchange for a release from all obligations under the mortgage.

CPVOD-19 Home Equity Conversion Mortgage (HECM) Options

If you have an HECM, commonly referred to as an FHA reverse mortgage, and can’t make your property charge payments, such as property taxes and insurance, because COVID-19 impacted you, you needed to request a COVID-19 extension to allow the additional time needed to make your property charge payments by May 31, 2023.

However, you may still be able to take advantage of a COVID-19 HECM Property Charge Repayment Plan, which must be initiated no later than May 11, 2024.

This allows servicers to offer you up to 60 months to repay property charges such as property taxes and insurance advanced by the servicer. This new repayment plan type is available if you are exiting a COVID-19 extension.

This additional time to repay delinquent property charges will increase the likelihood that you can cure property charge delinquencies and avoid foreclosure.

You can be approved whether you have been unsuccessful on a prior repayment plan and whether you owe more than $5,000 in property charge advances. Also, it only requires a verbal attestation from you that COVID-19 impacted you.

David Mully

David Mully is president and CEO of Lender Insider, a mortgage consulting firm. With 26 years in the mortgage industry, he has worked as both a mortgage loan officer and in the business-to-business sector of the industry. He is the former author of the weekly “Mortgage Search” column for Observer and Eccentric Newspapers. You can read his blog at

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