FAST FIVE: Biden Admin Targets New Homeowner Aid That Could Reduce Mortgage Payments By Up To 25%
Most borrowers who took on forbearance plans at the beginning of the pandemic will start to see them expire around September and October and the country's national foreclosure ban expires July 31. About 75% of new home loans are currently backed by the federal government, the Journal reports.
Bob Broeksmit, president and chief executive of the Mortgage Bankers Association, said that the new modifications are “an important additional step to give people the opportunity to stay in their homes after they had a hardship during the pandemic.” As of now, about 1.55 million homeowners haven't made mortgage payments in the last 90 days.
Many of the borrowers who the new program will affect “have lower incomes and make smaller down payments than people with other government-backed loans”, the report notes.
Advocating for the program, Broeksmit continued: “People don't enter into mortgage borrowing with the notion that they can't afford the payment.” And in addition to this planned new aid, a $47 billion federal program has already been implemented to help tenants who can't pay rent due to Covid.
The Journal notes that state and local governments are “struggling to distribute the money,” however. Isaac Boltansky, director of policy research at Compass Point Research & Trading said: “If a reduction in monthly costs helps keep that borrower in their home until they are back on their feet, then it is a win for the borrower, policy makers, and Uncle Sam, as he owns the credit risk.” We're not sure that you know exactly what the words “credit risk” mean, Issac.