Lenders are increasingly seeking mortgages with lower interest rates.
And many of them are getting more lenient in enforcing the terms of the loans.
Lenders can get a mortgage with a lower interest rate if borrowers are not making payments on time or have less than $2,000 in credit history, according to data from the Federal Reserve Bank of St. Louis.
But they are also getting more leeway to apply for loans that offer lower rates to lower-income borrowers, like those from local governments.
The Federal Housing Finance Agency (FHFA) announced Tuesday that it is waiving the requirements that the borrower must be on a fixed income or no fixed income, be a U.S. citizen or permanent resident, and have at least one student loan outstanding.
That’s good news for people who have been struggling to pay off their student loans, but it may be a blow for people like Rhea Feltz, who has a $50,000 federal Stafford loan she said she couldn’t afford to pay back.
Rhea, who’s from Illinois, has been struggling with student loan debt for years.
She’s also been battling chronic health issues that forced her to take medication for the pain and she doesn’t have the ability to pay her medical bills.
Rhee said she is now one of the first in her family to qualify for subsidized Stafford loans because her employer helped pay for her education.
Ria Feltzel, Rhea’s mother, is one of those families.
RIAH FELTZ/NPR 1 of 13 MICHELLE DUBIN/AFP/Getty Images Rhea was able to get subsidized Stafford loan through her employer.
She also received help paying for her child’s college education and paying off her credit card debt.
She said the change helps her pay off her debt and that it was important for people to know that lenders can still charge lower rates if borrowers aren’t making payments.
“I’m not making a mockery out of it, it’s not like I’m doing a million dollars or something,” Rhea said.
“It’s just the facts.”
But, as with many borrowers, Rhee and others who were able to qualify through the new loan rules said that many lenders still aren’t enforcing the standards.
“If you’re in the low-income group, you should probably have the loan, because that’s where your money is going,” said Amy Wulf, a mortgage loan specialist at Wells Fargo who has done extensive research on federal student loans.
But, she added, “I can’t say I know every lender in the country.”
Fannie Mae and Freddie Mac, two of the largest federal lenders, declined to comment for this story.
The Department of Housing and Urban Development, the Treasury Department and the U.K. Office for Fair Trading also did not respond to requests for comment.
The new rules are one of many steps the FHFA is taking to ease the burden on low- and moderate-income families struggling with rising debt.
Fannie and Freddie, the two largest federal mortgage lenders, are also taking steps to help families make the payments on their student loan payments, like reducing the maximum monthly payments and extending the grace period on certain mortgage loans.
FHA and HUD are also giving more credit to low-to-moderate-income parents who make payments on student loans through the federal Family Educational Assistance Program (FEP).
But Fannie is still waiving certain loan requirements.
For example, borrowers with less than five years of income on their loans can still qualify for FEP, but they are limited to $250,000 or less in income and the minimum loan amount is $100,000.
FHSA is waivinng certain mortgage loan requirements and waiving others to lower borrowers who have less income.
The FHHA said it has changed how it calculates the amount of loan debt owed to borrowers.
The agency has also revised how it considers certain loan characteristics like income, credit scores, and employment status.
In addition, the agency said borrowers with lower incomes can apply for Stafford loans that do not have a fixed interest rate.
The FHPA said it will not be waiving other loan requirements for borrowers with income above a certain threshold, such as those with incomes below 300 percent of the poverty line.
The changes mean that borrowers who are low- to moderate-incomes or who don’t make payments in full can still be eligible for subsidized loans through Fannie or Freddie.
The Obama administration has also stepped up enforcement of the Stafford loan rules.
The department said it’s adding a new requirement that borrowers pay the entire principal balance on their loan by the due date of the loan.
The loan must be paid off by the date it is due, which means borrowers who do not make their payments can still receive an interest rate reduction.
“In some cases, the borrower is able to pay the principal balance before the due