After the pandemic hit, the federal government passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act, which in part allowed mortgage holders to take a three-month break from making payments, since so many Americans had lost their jobs. The initial guidance from the government about the break, called forbearance, was that after the three months were up, the entire balance was due at once.
The Finance Housing Federal Authority has now said that they will allow borrowers to modify these payments. What this means is that borrowers can either pay these deferred payments when they sell their property. add them to the balance if they are refinancing their mortgage, or add them to the end of the loan.
This is a huge benefit to the housing and mortgage markets in general, and to the many Americans who took advantage of forbearance and were worried about how to pay these funds back. This will allow more borrowers to stay in their homes rather than falling into foreclosure, thus keeping more homes off the market, which is what happened when the financial crisis hit back in 2008. Back then, many more homes come on the market because people were not able to make their payment and modification options where not as aggressive as they are today.
The Federal Reserve also sprang into action in response to the pandemic, slashing rates to stimulate the economy and driving mortgage rates downward. Currently rates are at historical lows ranging from 3-3.25 percent for a 30-year fixed and 2.625-2.875 percent for 15-year rates.
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