Read more: Biden has extended the eviction moratorium – what that means for mortgage
Under the moratorium, homeowners with federally guaranteed mortgages can miss monthly payments for up to 18 months without penalty and repay them later. That relief is set to expire in September for borrowers who entered into forbearance plans early in the pandemic. Certain borrowers earning less than before the pandemic who can’t resume their regular monthly payments are given up to three months of additional forbearance.
“Today, approximately 1.75 million Americans remain in forbearance,” the White House said in a statement. “In order to ensure a stable and equitable recovery from the disruptions of the COVID-19 pandemic and prepare for homeowners to exit mortgage forbearance, the Biden-Harris Administration is taking action to keep Americans in their homes and support a return to a more stable housing market.”
Deferring mortgage payments, lowering interest rates or extending mortgage terms have been effective in helping homeowners strapped for cash during an economic recession, according to the Wall Street Journal, citing research examining the 2008-09 financial crisis.