United States Capitol Building at nightGetty
Mortgage lenders are making efforts to assist government workers impacted by the now 33-day shutdown. From offering delayed payments and waived late fees to launching full-scale furloughed-employee refinance programs, the industry’s biggest players are taking action when even elected members of Congress won’t.
Take Better Mortgage, for example. The new-age mortgage company announced earlier this week its “Shutdown Relief Emergency Refi” program, which allows federal employees to leverage their home equity for a cash-out refinance loan — no payments or interest necessary until 30 days after the furlough ends.
According to the company’s announcement, the program is “designed for federal employees to be able to use the equity in their home to live on during this period of government shutdown when they are either furloughed or working without pay. Not only will it help by delaying loan payments until the shutdown is over; it can also provide the cash-flow needed for them to cover their other expenses.”
Fannie, Freddie & Others Join The Effort
Fannie Mae and Freddie Mac are also making it easier for furloughed workers to refinance and use their equity to cover short-term expenses. The GSEs removed a number of roadblocks from the typical refinancing process, making it easier to qualify despite not having recent pay stubs or an employer to verify their jobs. For now, employees just need to have two months of cash reserves to cover their mortgage payments.
As Elyse Sullivan, executive vice president of national operations at GuardHill Financial explains: “In response to the government shutdown extending over a longer period, Fannie Mae and Freddie Mac have imposed a reserves requirement to offset the risk associated with the interruption of income for government workers who are not getting paid. This announcement was made by the agencies to extend consideration of coping with the hardships imposed by the shutdown.”
HomeSnap is another lender attempting to provide some relief for furloughed government workers. The company is offering to pay, in full, the next rent or mortgage payment for 10 impacted federal workers. To enter, workers just need to tell their story on social media, tag HomeSnap and use the hashtag #MyHomeLoans or #ShutdownStories. HomeSnap will choose 10 winners at random.
Other lenders that have announced assistance programs include USAA, Navy Federal, PenFed, FedChoice, Wells Fargo and BBVA Compass. The city of Denver is also offering local homeowners two mortgage payments, up to $5,000, and Washington, D.C., has another similar program. The city’s mayor, Muriel Bowser, announced earlier this week that the DC Housing Finance Agency would allocate $9 million to offer zero-interest loans for local federal workers.
“This unprecedented shutdown has created a tremendous amount of economic uncertainty for federal employees and their families, and so we are doing everything we can to ease the burden and alleviate stress,” Bowser said. “It is very unfortunate that this is what it has come to, and I join millions of Americans in urging the President to work with Congress to end this shutdown and get our federal employees back to work.”