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Mortgage Assistance: Forebearance, modifications, short-sells

Underwater home
Erik Martin
UpdatedApr 27, 2022
Key Takeaways:
  • Many COVID-related mortgage assistance programs are winding down. However, you still may qualify for mortgage relief.
  • Contact your mortgage loan servicer about mortgage relief like forbearance or modification.
  • Check with your state government or federal agencies for mortgage assistance in your area.

Having difficulty paying your mortgage and making ends meet? It can be easy to feel overwhelmed by financial responsibilities and the pressure of paying your monthly mortgage bill. But don’t despair – there are mortgage assistance options and mortgage relief programs you may qualify for that can ease your burden.

Learn more about 2022 mortgage relief solutions that may be available to you by reading this article.

What is mortgage assistance?

If you have a mortgage loan but are experiencing challenges paying your bills, you are not alone. Many borrowers don’t know where to turn when a financial hardship occurs, such as the loss of a job, the death of a loved one, or the onset of an expensive medical condition.

Thankfully, you may be eligible for a mortgage relief program or other option that can ease your financial anxiety without the immediate fear of losing your home.

“Mortgage relief and assistance programs are available from several different entities, including mortgage lenders,” says Martin Orefice, CEO of Rent To Own Labs. “Their basic goal is to keep homeowners in their homes and paying their mortgages. Different programs offer different ways to modify a loan or pause mortgage payments for a period to help avoid foreclosure.”

These and other programs can help borrowers catch up on missed payments and lower their monthly payments, according to Grant Higginson, a debt relief expert in New York City.

“There are many different types of mortgage relief programs available, and each has its own eligibility requirements in terms. Borrowers should research all of their options before choosing a program to ensure that it is the best fit for their unique situation.”

Good candidates for mortgage assistance and mortgage relief programs

There are many scenarios and circumstances in which financial hardship assistance is needed.

“Good candidates are those who, through some lifestyle rearrangement and good financial advice, can get control of their life again. These people need to learn how to work with what they have,” says Adam Garcia, founder of The Stork Dork. “Financial hardship programs are designed for people who find themselves in debt that is out of their control. These programs help you take control of your finances and reduce your expenses and debt.”

Higginson says the following are good prospects for exploring mortgage assistance/relief:

  • Homeowners struggling to make their monthly mortgage payments. “A mortgage relief/mortgage assistance program can help you lower your monthly payment amount,” he says.
  • Homeowners at risk of defaulting on their loan. “An assistance program can help you avoid foreclosure,” Higginson adds.
  • Homeowners with an adjustable-rate mortgage who face a potential increase in their interest rate. “The right option can help you lower your interest rate,” he continues.
  • A homeowner with a high fixed interest rate loan. “You can build your credit and lower your interest rate by taking advantage of an appropriate mortgage relief program or alternative loan,” he says.

2022 mortgage relief options

Unfortunately, there are currently no mortgage stimulus programs or rescue packages made available by the federal government that you can benefit from. The good news is that there are other options you can investigate to sidestep financial danger when you own a home and have a mortgage. Check out each of these mortgage assistance strategies.

Mortgage refinance

Often, the simplest way to lower your monthly mortgage costs and increase affordability is to refinance your mortgage loan.

“Refinancing is when you take out a new loan to replace your existing mortgage loan. This is often done to reduce your interest rate, saving you lots of money over time. It can also help lower your monthly payments or shorten the loan term if you desire,” explains Higginson.

But it doesn’t pay to refi unless you can lock in a lower interest rate than you are currently paying and plan to remain in your home for at least a few years. That’s because you’ll incur closing costs that can equate to between 2% and 5% of your loan amount, which will take a few years of new lower payments to recoup the costs. You may be able to roll your closing costs into your loan for a slightly higher rate instead, but that may yield a higher rate than your current interest rate.

Streamline refinance

If you have an FHA loan, you may be allowed to pursue a streamline refinance. This means the refi can be accomplished with fewer documentation requirements and fast-tracked to the closing table.

“The Department of Veterans Affairs also offers a streamline refinance program for borrowers with a VA home loan. This allows borrowers to refinance their loans to a lower interest rate without going through a traditional underwriting process,” says Higginson.

Or, if you have a USDA home loan, you may be allowed to choose a traditional USDA streamline refinance or a USDA streamlined assist refinance. Each option has its pros and cons, rules, and eligibility requirements.

However, not all borrowers will qualify for an FHA, VA, or USDA streamline refinance, including those with a lower credit score or an unsteady source of income.


Feel like you’re in over your head with mortgage payments? You can request a forbearance from your lender, in which they agree to temporarily lower or suspend your mortgage payments for a particular time – such as 3 to 6 months. During this span, you will not be required to make any mortgage payments.

“This can give you extra time to get back on your feet financially. But after the forbearance period ends, you will usually have to resume making your regular monthly mortgage payments, often with interest charged,” continues Higginson.

To qualify, you likely have to demonstrate financial hardship, such as a job loss, overwhelming medical bills, or other unforeseen expenses that you cannot afford to pay.

Currently, you can ask for up to two forbearance extensions of three months duration if you have a conventional loan (backed by Freddie Mac or Fannie Mae), so long as you were in a forbearance plan as of February 28, 2021. The same holds true for FHA, USDA, or VA loans, provided you entered into a forbearance plan prior to June 30, 2021.

Loan modification

A loan modification involves changing the terms of your existing mortgage loan. This could include lowering your interest rate, extending the term of your mortgage loan, or both.

“Loan modifications can help borrowers who have difficulty making all of their payments on time,” says Higginson.

To be eligible for a loan modification, borrowers typically must be behind on their mortgage payments or at risk of defaulting on the loan. You will also need to prove you cannot make your current monthly payments.

Before committing to a mortgage relief program

Prior to applying for or enrolling in any mortgage relief program for mortgage assistance strategy, it’s crucial to do your homework.

“Some of these programs may hurt your credit score or affect your ability to sell your home down the road,” Orefice cautions. “Make sure you investigate all of these details before committing to any assistance plan.”

That means carefully reading all the fine print involved – the terms and conditions of the program/loan.

“Take the time to compare different programs and options so that you can find the best one for your situation,” adds Higginson. “Realize, as well, that there may be some risks involved with any particular program, such as the possibility of losing your home if you default on your loan or don’t abide by the terms.”

Frequently Asked Questions

What is mortgage assistance/relief?


What is mortgage assistance/relief?

Mortgage relief and assistance come in many forms you can pursue, including a refinance of your existing mortgage loan, a streamline refinance, a request for loan forbearance, or a request for a loan modification. Talk to your lender about options you may qualify for that can lower or pause your monthly mortgage payments and make your loan more affordable overall.

What is forbearance?


According to the Consumer Financial Protection Bureau, forbearance involves your mortgage servicer or lender permitting you to pause or reduce your mortgage payments for a limited time while you rebuild your finances. For most loans, no additional fees, penalties, or additional interest (beyond scheduled amounts) will be added to your account. Also, you are not required to submit additional documentation to qualify. You can simply inform your loan servicer that you have a financial hardship. Forbearance doesn’t forgive or erase your payments. You are still required to repay any missed payments, which, in most cases, may be repaid over time or when you refinance or sell your home. Before the end of the forbearance, your servicer will contact you about how to repay the missed payments.

What is loan modification?


A mortgage loan modification is a change in your loan’s terms that can decrease your monthly payment to an affordable amount, per the Consumer Financial Protection Bureau. The modification is considered a type of loss mitigation. A loan modification may involve extending the number of years you have to repay the mortgage loan, lowering your interest rate, and/or forbearing or decreasing your principal balance.