While the Homeowner Assistance Fund (HAF) may not be available in all states due to lack of funding, there are other places to turn to for help with your mortgage. The Federal Housing Administration (FHA) recently announced a new option called the Payment Supplement to help struggling homeowners keep their homes and avoid foreclosure.
This initiative is a part of FHA’s ongoing efforts to support borrowers who are behind on their mortgage payments. Established in May 2024, this solution provides a practical, temporary way to make mortgage payments more manageable for FHA borrowers.
Here’s a breakdown of what the Payment Supplement plan offers, who it’s for, and how it works.
The Payment Supplement plan is designed to support borrowers with FHA-insured mortgages who are behind on their payments and may be at risk of foreclosure. It gives mortgage servicers a new way to reduce monthly mortgage payments by up to 25% for a temporary period.
Here’s how it works:
- Brings Payments Current: A Partial Claim is used to cover any missed payments and bring the mortgage current. This gives homeowners a fresh start with their mortgage, free of overdue payments.
- Monthly Payment Reduction: The remaining funds from the Partial Claim go into a special FHA account managed by the mortgage servicer. These funds are then used to cover a portion of the borrower’s monthly principal and interest payments, aiming to reduce monthly payments by as much as 25%.
This reduction is achieved without changing the original interest rate on the mortgage, which can be helpful for borrowers who may have initially secured a lower rate than current rates.
The FHA’s goal with this plan is to provide relief to homeowners who are facing financial hardships, helping them to stay in their homes while catching up on payments.
This payment reduction can last for up to three years, providing a substantial period for homeowners to get back on their feet financially. During this time, the borrower only needs to pay the reduced monthly amount, making it easier to manage their mortgage while handling other financial responsibilities.
The program is intended for borrowers with FHA-insured single-family mortgages who are behind on their payments. It can be especially beneficial for those who aren’t eligible for other FHA options, such as the FHA Recovery Modification, often because their mortgage interest rate is lower than current rates.
If you’re an FHA borrower struggling to keep up with your mortgage payments, reach out to your mortgage servicer to discuss the Payment Supplement and other FHA loss mitigation options. They should be able to help assess your eligibility and guide you through the process of securing it.
The sooner you take action, the more options you’ll have for managing your mortgage and protecting your home.
By Admin –
