The USDA has extended the COVID-19 Special Relief Measure for its Single-Family Housing Guaranteed Loan borrowers until September 30, 2023. This measure offers new alternatives for borrowers facing financial hardship due to the pandemic. Here are some of the details and benefits of this measure.

Interest Rate Reduction

One of the alternatives that the USDA offers is an interest rate reduction. Your lender can lower your interest rate to match the current market rate or below. This can reduce your monthly principal and interest payments and save you money over the life of your loan.

To qualify for this option, you must have a USDA loan that was closed on or before January 1, 2020. As of March 1, 2020, it is required that your mortgage payments be current or no more than 30 days overdue. Your lender will evaluate your income, expenses, and credit history to determine your eligibility for an interest rate reduction.

Term Extension

Another alternative that the USDA offers is a term extension. Your lender can extend the length of your loan by up to 20 years. This can also reduce your monthly principal and interest payments and make them more affordable.

To qualify for this option, you must have a USDA loan that was closed on or before January 1, 2020. You must also be more than 30 days past due on your mortgage payments as of March 1, 2020. Your lender will evaluate your income, expenses, and credit history to determine if you are eligible for a term extension.

Mortgage Recovery Advance

A third alternative that the USDA offers is a mortgage recovery advance. Your lender can provide a one-time payment to cover your past-due mortgage payments and related costs, such as taxes, insurance, and fees. This can bring your loan current and prevent foreclosure.

To qualify for this option, you must have a USDA loan that was closed on or before January 1, 2020. You must also be more than 30 days past due on your mortgage payments as of March 1, 2020. Your lender will evaluate your income, expenses, and credit history to determine if you are eligible for a mortgage recovery advance.

Homeowner Assistance Fund

In addition to the COVID-19 Special Relief Measure, borrowers can access funds from the Homeowner Assistance Fund (HAF), part of the American Rescue Plan. The HAF allocates $9.961 billion to states, Washington, D.C., territories, and Tribes to aid homeowners affected by the economic crisis brought about by COVID-19. These funds can be utilized to provide support for mortgage payments, homeowner’s insurance, utility payments, and other designated purposes.

To qualify for this assistance, you must have experienced financial hardship after January 21, 2020, due to unemployment, income reduction, or increased expenses related to the pandemic. To meet the eligibility criteria, your income should be equal to or lower than 150% of the area median income or reside in a low-income census tract. You can contact your state housing finance or local housing counseling agency to apply for this assistance.

Conclusion

If you have a USDA loan and are struggling to pay your mortgage due to the pandemic, you may have some options to lower your payments and avoid foreclosure. The USDA has extended the COVID-19 Special Relief Measure until September 30, 2023, which offers new alternatives such as interest rate reduction, term extension, and mortgage recovery advance. You can also access funds from the Homeowner Assistance Fund, part of the American Rescue Plan. To determine your eligibility for any of these options, contact us today!