Despite the financial strains associated with the time, Secretary of the U.S. Department of Housing and Urban Development (HUD) Marcia L. Fudge recently announced that approximately 2 million Americans were able to stay in their homes from the beginning of the COVID-19 pandemic through December 2022. This was accomplished as a result of programs operated by the Federal Housing Administration (FHA) that allowed homeowners, struggling to meet their monthly mortgage payments due to the pandemic, to either pause or reduce payment or loan mediation adjustments, which prevented them from entering into foreclosure.
According to HUD, the FHA has assisted 1,845,000 individuals with mortgages to enter into an agreement with their banks to have payments placed in forbearance (paused or reduced) due to the pandemic. An additional 1.2 million were permitted to have any mortgage arrearages placed at the end of loans as well as resume monthly payments on a timely basis.
“Although the pandemic has ended, the economic effects will remain a challenge for the foreseeable future,” said Fudge. “These impactful and effective foreclosure prevention tools will help struggling borrowers find the right option to help them get back on their feet and keep them in their homes. These tools have been so successful already, which is why FHA worked to enhance them further and include more borrowers.”
COVID-19 Negatively Affected Black Homeowners
“People like to say that the coronavirus is no respecter of race, class, or country, that the disease COVID-19 is mindless and will infect anybody it can. In theory, that is true,” wrote columnist Columnist Charles Blow. “But, in practice, in the real world, this virus behaves like others, screeching like a heat-seeking missile toward the most vulnerable in society. And this happens not because it prefers them, but because they are more exposed, more fragile, and more ill.”
Moreover, the Black homeownership rate experienced a continuous decline since the Great Recession, and Black households have been disproportionately affected by predatory lending practices. And last summer, while announcing a plan to forgive student loan debt, President Joe Biden noted the intersection of such debt and homeownership.
“Many people cannot qualify for a mortgage because of student loan debts that are especially heavy on Black and Hispanic homeownership,” Biden said. “And the pandemic only made things worse.”
Help is Available at HUD
A COVID-19 toolkit has been extended to mid-2023 by the FHA to help all eligible borrowers who are struggling to avoid foreclosure, regardless of the reason for their hardship.
A HUD release states “Included in these new enhancements are updates that also increase the limit on the amount of interest-free arrearages that borrowers can pay at the end of their mortgage term to help maximize the number of borrowers able to retain their homes despite higher interest rates. The mandatory effective date of the changes is April 30, 2023, but mortgage servicers may begin offering these options to borrowers immediately.”
For additional information, go to www.hud.gov.