You’ll also find CARES Act mortgage relief options which Congress passed in response to the coronavirus pandemic.  

But these programs likely won’t offer the kind of relief you’re looking for.

HARP and FMERR, the two major relief programs, are now expired. And the CARES Act only offers temporary relief from mortgage payments; it cannot help you refinance into a better loan.

There’s just one large-scale mortgage relief refinance program for 2020 that helps homeowners the way HARP and FMERR did.

The Fannie Mae high LTV refinance option (HIRO) is still actively helping homeowners refinance with little or no equity in their homes.

In this article (Skip to…)

• HARP, HAMP, and FMERR (expired)
• HIRO (current)
• COVID-19 relief programs
• For FHA, VA, and USDA loans
• Veteran mortgage relief
• How a mortgage relief refinance works
• Why these programs exist
• FAQ

But many homeowners were still underwater on their mortgages — especially in areas where home values have fallen instead of rising in recent years. 

So Fannie Mae and Freddie Mac created similar relief refinances to help homeowners who missed the HARP window.

Freddie Mac’s FMERR became incredibly popular, very fast. Homeowners took advantage of this program at the same time rates fell to historic lows in 2019. Many were able to save thousands on their mortgages thanks to the enhanced relief refinance. 

But FMERR also came to an end in September 2019. 

That leaves just one major, nationwide mortgage relief program for 2020: Fannie Mae’s high LTV refinance option, or “HIRO.” 

Fannie Mae’s HIRO is a lot like HARP or FMERR. It allows homeowners to refinance with no equity or an underwater loan. And there’s no maximum LTV ratio.

The key difference? Only homeowners whose mortgages are currently owned by Fannie Mae can qualify. 

Other conditions to use the high LTV refinance option include: 

• Your loan-to-value ratio is at or above 97.01 percent for a single-family home (see a full list of HIRO LTV requirements here) 
• Your loan was originated on or after October 1, 2017
• You have a history of on-time mortgage payments
• You have no more than one late payment in the last year, and none in the last 6 months

And, importantly, you need a “net tangible benefit” to qualify for HIRO. 

That means there must be a clear reason for your refinance — whether it’s a lower monthly payment, a shorter loan term, or a switch from an adjustable-rate mortgage to a safer fixed-rate mortgage. 

You can find out whether you meet these guidelines for a HIRO refinance by checking with a lender. 

This came in the form of ‘forbearance,’ a relief plan that suspends borrower’s monthly mortgage payments until they get back on their feet financially.

Congress also protected homeowners from late fees, negative credit reports, and foreclosure during this time — even if they were unable to make home loan payments.

• Mortgage forbearance: Forbearance hits the pause button on your mortgage for up to 360 days. Interest continues to accrue, and you must make up the missed payments later. A mortgage forbearance works like a student loan forbearance program — providing temporary relief from the loan’s repayment during financial hardship
• Moratorium on foreclosures: Loan servicers for conventional and government-backed loans — including FHA, USDA, VA, and loans backed by Freddie Mac and Fannie Mae — can’t begin foreclosure proceedings through December 31, 2020, because of the CARES Act

But unlike a mortgage relief refinance program — like Fannie Mae’s HIRO or the Streamline Refinance which we’ll discuss below — coronavirus aid won’t offer a permanent solution or a lower interest rate for borrowers.

In fact, these relief options could cost you more in the long run. That’s because the missed amount has to be repaid with interest — which typically means extending your loan term or making bigger monthly payments after the forbearance plan ends.

Popular mortgage relief programs since 2009 (including HARP, HAMP, FMERR, and HIRO) have only been available to homeowners with conventional mortgages — loans backed by Fannie Mae or Freddie Mac. 

But what if your loan is government-backed? 

Homeowners with FHA, VA, and USDA mortgages have access to different mortgage relief programs than those with conventional loans.

Namely, they can use the streamline refinance.

The Streamline Refinance is a special mortgage refi program for people with government-backed loans.

It’s similar to a mortgage relief refinance, because you can use a Streamline Refi even if your home is underwater or has very little equity. 

And the streamline refinance has other benefits, too.

• There’s less paperwork because you don’t have to re-verify your income or employment or get the home appraised
• Government-backed loans typically have below-market rates, so you might be able to get a much lower rate and monthly payment using a streamline refinance

Homeowners can qualify for an FHA Streamline if they’ve made at least three consecutive on-time payments on their existing FHA loan.

Even if you make your three consecutive payments while in forbearance, you may qualify for FHA Streamline refinancing.

For a VA Streamline Refinance (also called the ‘IRRRL’), the rules are even more lenient.

You can use this refinance even if your current loan is delinquent. However, the lender must verify that the reason for delinquency has been resolved and you’ll be able to make payments on the new loan.

One benefit of a VA loan is that the VA can help you out if you’re having trouble making your mortgage payments.

Veteran mortgage relief can come in the form of a Streamline Refinance loan (IRRRL) or getting help from a VA loan professional to figure out your payment plan.

If you’re underwater on a VA loan and need a relief refinance, you may be able to use the VA streamline refinance (IRRRL) to do so. 

Like other streamline programs, the IRRRL requires no income or employment check, and skips the home appraisal — so your LTV won’t matter. 

Or if you’re not sure whether a refinance is right for you, you might take advantage of the other VA relief program. 

For VA loan holders as well as veterans with non-VA mortgages, the VA offers access to professional counselors who can help you if you’re having trouble making your payment.

These people help veterans figure out whether they should refinance, try to restructure their loan, or take another measure to prevent foreclosure. 

Even better, the VA’s “loan technicians” work with your lender on your behalf — so you don’t have to figure out all the logistics of a mortgage relief program yourself. 

Loan-to-value is the amount you owe on your home loan compared to the home’s current value. 

For example, if your home is worth $100,000, and you owe $97,000 on your mortgage, you have a 97 percent loan-to-value ratio. 

Incidentally, 97 percent is the highest LTV you can normally have to qualify for a conventional refinance. 

When a home’s value drops faster than the owner is paying off their mortgage, their LTV can suddenly spike above that 97 percent benchmark. This makes them ineligible for a refinance under normal rules. 

Using the example above: Say home values in the area start dropping, and that $100,000 home is suddenly worth $90,000. 

The homeowner still owes $97,000 on their mortgage. So their new loan-to-value ratio is 108 percent (97/90=1.08). They are no longer allowed to refinance, and might be stuck with a mortgage payment they can’t afford. 

Mortgage relief programs flip the rules around. Instead of staying under a LTV ratio, your loan must be at or above a LTV ratio. 

Mortgage relief programs flip the rules around. Instead of staying under a LTV ratio, your loan must be at or above a LTV ratio. 

In 2009, HARP began letting people refinance with LTVs of 81 percent or higher. Many lenders capped the allowable LTV at 105 percent.

Later on, most lenders raised the maximum LTV bar to 200 percent or removed it altogether. So homeowners could refinance no matter how deeply underwater they were on their mortgages. 

The current relief refinance (HIRO) works the same way. 

There’s no LTV ceiling for refinancing with the aptly named “high LTV refinance option.” But your LTV cannot be 97.01 percent if you’re refinancing a single-family home.