As FHFA extends foreclosure moratorium for final time, here’s what struggling homeowners can do

The Federal Housing Finance Agency (FHFA) on Wednesday once again extended its block for a final time on foreclosures and rental evictions if your mortgage is backed by Fannie Mae and Freddie Mac. It is also blocking real estate-owned (REO) evictions.

The moratorium preventing foreclosures on homes during the pandemic was set to expire on June 30, 2021, but the FHFA’s announcement extends the foreclosure halt another month until July 31, 2021. 

"This action is just the latest step FHFA has taken to benefit homeowners and the mortgage market during the pandemic," the agency said in a statement. "FHFA continues to monitor the effect of the COVID-19 servicing policies on borrowers, the enterprises and their counterparties, and the mortgage market."

If you've been affected by the pandemic financially and are struggling to keep up with your mortgage payments, you could consider taking out a mortgage refinance to decrease your monthly payments. Visit Credible to compare multiple mortgage companies at once and find one that fits your needs. 

FHFA'S NEW MORTGAGE REFINANCE OPTION COULD CUT PAYMENTS BY HUNDREDS FOR SOME HOMEOWNERS

What to do if you are struggling to make mortgage payments

If you're struggling to make your mortgage payments, there are several options available to you. Biden’s extension will keep homeowners out of foreclosure until July 31, 2021, but there are also other possibilities to consider. 

Refinance: With mortgage rates at record lows, refinancing your mortgage could lower your interest rate and save you money on your monthly payment, as well as the amount of interest paid over the life of the loan. The FHFA even has low-income refinance options for those with income or credit profiles that are below the typical homeowner, which could save them $100 to $250 per month. 

Refinances are a great option if you:

• Would have an easier time making your mortgage payment if it were lower
• Plan on staying in the home for several more years
• Are interested in pulling cash out of the equity in your home

Visit Credible to get in touch with a lender to see your loan options and find your personal interest rate.

US HOMEOWNERS INCREASINGLY EXITING MORTGAGE FORBEARANCE, DATA SHOWS

Forbearance: The deadline to apply for mortgage relief, such as mortgage forbearance, is quickly approaching. For homeowners that can’t make their mortgage payment due to hardships caused by COVID-19, the deadline is June 30, 2021. This allows homeowners to skip their monthly payment for up to 18 months.

The federal government’s foreclosure memorandum will keep you from losing your home for now but avoiding foreclosure for the next month is not a permanent financial solution. Consider options like a mortgage refinance to permanently lower your monthly payment. You can visit Credible to find your new rate without affecting your credit score.

When a mortgage refinance is not an option

While refinancing can be a great option to set you up for financial success amid today’s low interest rates, it's not an option for every homebuyer. While there are government-backed programs that help those with low credit scores or lower income obtain a mortgage refinance, there are factors that could keep you from qualifying.

You’re missing payments: If you're currently missing payments, it's too late to apply for a mortgage refinance. The FHFA’s option allows homeowners to have missed no more than one payment in the last 12 months and no missed payments in the last six months. While payments missed while in COVID-related forbearance don’t count, homeowners must be out of forbearance and making payments once again. Other refinance options are typically more strict. 

You don’t have a job: If unemployment is the reason a homeowner is unable to make payments, they will not be able to obtain a mortgage refinance. In order to reduce the risk of foreclosed homes, a federal rule called The Ability to Repay rule means mortgage lenders have to ensure borrowers have the means to repay their loan before mortgage companies can give it to them. 

You are currently in forbearance: If you took advantage of the mortgage relief offered by the federal government, such as a mortgage forbearance option, and are currently still in forbearance, you cannot take out a refinance until you become current again. Fannie Mae gave some guidelines on what homeowners can do to become current, including paying back their missed payments, remodifying the terms of the loan, deferring the payments and more.

Final thoughts

The Biden administration extended its block for another month on foreclosures, halting lenders from beginning foreclosure processes and pausing rental evictions on REO properties, bringing relief to those struggling to make their payments due to COVID-19. 

But homeowners can also consider options like refinancing their mortgage to help bring long-term relief to their mortgage payments. Contact Credible to speak to a mortgage lender about avoiding foreclosure and get your questions answered. 

HERE’S WHY YOU SHOULD (OR SHOULDN’T) REFINANCE YOUR MORTGAGE

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.