What Is A Mortgage Relief Program?

With nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.

Dori Zinn Loans Writer

Written By Dori Zinn Loans Writer

Dori Zinn Loans Writer

Loans Writer

Kim Porter began her career as a writer and an editor focusing on personal finance in 2010. Since then, her work has been published everywhere from Forbes Advisor to U.S. News & World Report, Fortune, NextAdvisor, Credit Karma, Bankrate, and more.

Published: May 23, 2023, 2:13pm

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After taking out a home loan, there may come a time when you can’t make a scheduled payment. But before you fall too far behind, it’s important to check out your options for getting back on track.

How Mortgage Relief Programs Work

Every mortgage relief program has different eligibility requirements and qualifications, but they all have a similar premise. They give homeowners financial relief so they don’t default on their home loans. Most mortgage lenders and servicers don’t want you to face foreclosure, so relief programs are there to make sure you can keep your home without going further into debt.

3 Mortgage Relief Options

While many mortgage relief options are available today, you might see fewer than you once did at the height of the Covid-19 crisis. Here are some options to explore.

1. Contact Your Lender or Servicer

Each lender and servicer offers their own mortgage relief options with different qualifications and eligibility requirements. If you’re struggling to make your monthly payments, contact your lender to see what guidance they can offer. Some might offer a forbearance period where you can temporarily stop making payments on your mortgage without penalties. Others might have a payment or interest rate reduction offer, depending on your circumstances.

Lenders don’t want to see you struggle—so more often than not, they will work with you. Even the type of loan can help you determine if you have choices to get help. For instance, those with a loan backed by the U.S. Department of Veterans Affairs (VA) or veterans with non-VA mortgages can reach out to a VA loan counselor to discuss options based on their issues.

2. Try Government Programs

There are mortgage relief funds available at every level: federal, state and local. The U.S. Treasury Department offers the Homeowner Assistance Fund (HAF) as part of the American Rescue Plan Act. It’s there to help anyone in the U.S. avoid mortgage delinquencies, defaults, foreclosures and other hardships involving their homes. Funds are disbursed on the local level, so it’s best to check HAF programs by state.

Additionally, each state offers its own mortgage relief options. Some programs are loans, which need to be paid back, while others are grants that you don’t need to repay. Check to see what your state offers and which ones you’re eligible for. Also, see if your city or county has programs for mortgage relief.

3. Talk to a Housing Counselor

The U.S. Department of Housing and Urban Development (HUD) has counselors throughout the country that can assist you with housing-related issues. So you can get guidance on topics like buying and selling a home but also information about foreclosures, defaults and mortgage delinquencies. It’s completely free to talk with a HUD-approved counselor and get advice.

How To Qualify for Mortgage Relief

Every mortgage relief program has different qualifications. Some might expect you to show proof of a job loss or a reduction in hours to prove you are experiencing financial difficulty. Others might expect you to show that you’re already behind on payments.

For instance, if you’re applying for the Homeowners Assistance Fund, you’ll need to show that you’ve experienced financial hardship after Jan. 21, 2020, and detail that hardship, whether it was a job loss or major financial burden, like increased health care costs.

Because each program is different, it’s important to explore all your options first to see which ones you’re eligible for.

How To Apply for a Mortgage Relief Program

Applying for a mortgage relief program usually depends on where you have your mortgage and what organization offers the relief. Even federal programs might require you to apply online based on where you live. HAF has a directory of state programs where you can see if the fund is still available in your state and how to apply for it.

Mortgage Relief Program Limits

In most cases, mortgage relief programs have term limits. If you applied for forbearance from your mortgage lender, that forbearance period lasts anywhere from three to six months and in some cases, up to 12 or 18 months, depending on your situation. Once the forbearance period ends, you’re obligated to start making payments on your loan.

If you receive a grant to help make your mortgage current, those payments usually go straight to your loan servicer. Your lender might get one lump sum or maybe a couple of payments over time, but after that, you’re on the hook for making payments again. If you received a temporary interest rate reduction, your lender may have a time stamp on when that reduction ends.

Steps To Take If You’re Struggling To Make Mortgage Payments

Rework your budget. If your mortgage is becoming too much to afford, go through your budget to see where you can free up some extra cash. Look at the line items that have a fluid amount, like groceries, dining out and shopping.
Contact your lender. If you’re otherwise current on your loan or recently were late on a payment, contact your lender to discuss your situation. They might offer forbearance, an interest rate reduction or another mortgage relief program, based on your situation.
Talk to a housing counselor. If your lender offers limited options (or none at all), meet with a housing counselor. They might be able to find some programs you’re eligible for, and that fit your needs best. Housing counselors are free, so make sure you find one approved through HUD—and don’t fall for a scam.
Consider refinancing. Refinancing your mortgage might be a good idea if you can find an interest rate lower than what you’re paying right now. Look for loans with the longest terms, so monthly payments are the lowest available.

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