Coronavirus Guide to the Mortgage Relief Options
A lot of people have & will be impacted financially from this coronavirus pandemic. There will be a lot of lost jobs & unemployment is projected to increase. With that comes inability to make mortgage payment. Federal & state governments have announced that they’re offering assistance to help struggling homeowners during this time.
A new federal law, call CARES Act which is the” Coronavirus, Aid, Relief & Economic Security Act.” This was put in place to protect homeowners with federally backed morgages:
- A foreclosure moratorium.
- A right to forbearance for homeowners who are experiencing a financial hardship due to the COVID-19 emergency.
However, if you don’t have a federally back mortgage then there’s still hope. There are relief options through your mortgage servicer or from the state.
Before I proceed, let me explain what forbearance means & how it work. Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage for limited period of time. PLEASE NOTE: Forbearance doesn’t erase what you owe – you’ll have to repay any missed or reduced payments in the future. If your income is restored, reach out to your servicer and resume making payments as soon as you can.
CARES Act Relief Options
If your mortgage is a federally backed mortgage, you have two mortgage relief options under the CARES Act:
- First, your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
- Second, if you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days.
You also have the right to request one extension for another up to 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.
If your mortgage is backed by Fannie Mae or Freddie Mac
In addition to the foreclosure moratorium and forbearance, if you are granted forbearance to delay making your monthly payments during this temporary period:
- You won’t incur late fees
- You won’t have delinquencies reported to credit reporting companies
- Foreclosure and other legal proceedings will be suspended
Borrowers with a mortgage not backed by the federal government
If you have a mortgage loan that is not backed by one of the federal agencies or entities listed above, contact your servicer. The CFPB and other financial regulators have encouraged financial institutions to work with borrowers who are or may be unable to meet their obligations because of the effects of COVID-19.
Your servicer should help you identify alternatives that may be available to you given your specific circumstances.
Your state may also offer additional mortgage relief options
Many states are implementing or considering various mortgage relief options, including the suspension of foreclosures, as well as additional assistance for homeowners. Check your state’s government website for details.
How to request forbearance or mortgage relief
Call your lender or mortgage servicer
You may have to wait on the line for a while to speak to your mortgage servicer because there are a lot of people in need right now. Be prepared with the following information and questions you want to ask, and check their website before you call to see if there is a list provided of information you may need. Have your account number handy.
You may need to explain
- Why you’re unable to make your payment
- Whether the problem is temporary or permanent
- Details about your income, expenses and other assets, like cash in the bank
- Whether you’re a service member with permanent change of station (PCS) orders
Questions to ask
- What options are available to help you temporarily reduce or suspend my payments?
- Are there forbearance, loan modification, or other options?
- Can you waive late fees?
Get it in writing
Once you’re able to secure forbearance or another mortgage relief option, ask your servicer to provide written documentation that confirms the details of your agreement and that you’re clear on what the terms are. With some forbearance programs, you may owe all of your missed payments at one time, or additional payments at the end of the mortgage might be required, so make sure you’re familiar with the final terms.
What to do once you’ve received a mortgage relief option
While you’re in the forbearance period, or working under another mortgage relief option, there are a number of things to do to continue to protect yourself. This advice applies to both a CARES Act forbearance and other mortgage relief that you might receive.
- Keep written documentation on hand. You want to make sure that you have this documentation available in case there are any errors on your monthly mortgage statements to ensure that your statement reflects the assistance provided.
- Pay attention to your monthly mortgage statement. Continue monitoring your monthly mortgage statements to make sure you don’t see any errors.
- Keep an eye on your credit. It’s a good idea to routinely check your credit reports in order to make sure there are no errors or inaccuracies. If you stop making mortgage payments without a forbearance agreement, the servicer will report this information to the credit reporting companies, and it can have a lasting negative impact on your credit history. If an error has been made, however, you can work to dispute it. Get more information about credit reporting and coronavirus.
- Once your income is restored, contact your servicer and resume your payments. With forbearance, you still owe the payments that you missed, but fewer missed payments mean you’ll owe less down the road.
- If you’re continuing to receive some income that turns out to be more than you need for your bills and expenses (including anything you keep paying on your mortgage), consider putting the extra money away so you can use it to pay off what’s needed later. If you can save any money now, it’ll be helpful when payments are due later.
Be aware of scams
Scammers often take advantage of vulnerable consumers during disasters and financial shocks. In addition to coronavirus-related scams, be aware of scams that falsely promise financial relief from your mortgage loan, or from foreclosure.
Here’s what to watch for as scammers may:
- Charge a high up-front fee for their services
- Promise to get you a loan modification
- Ask you to sign over your property title
- Ask you to sign papers you don’t understand
- Tell you to make payments to someone other than your servicer
- Tell you to stop making payments altogether
- Promise you payments in connection with providing credit card numbers and other personal information
Protections for renters
If you are renting from an owner who has a federally backed mortgage, the CARES Act provides for a suspension or moratorium on evictions. If your landlord has a federally backed mortgage or multi-family mortgage, you cannot be evicted for nonpayment of rent for 120 days beginning on March 27, 2020, the effective date of the CARES Act. After the 120-day period is up, the landlord cannot require you, the tenant, to vacate until providing you with a thirty-day notice to vacate.
If the property you rent isn’t covered by the CARES Act, many states have suspended all evictions and foreclosures due to the pandemic. Check the websites of your state government, state court , or legal aid program for details and updates.
Where to get additional help
If you need help working with your servicer or understanding your options you may want to reach out to a professional to help you with your specific situation.
- HUD-Approved Housing Counselors. The U.S. Department of Housing and Urban Development (HUD)-approved housing counselors can discuss options with you if you’re having trouble paying your mortgage loan or reverse mortgage loan. This may also include forbearance or a modified payment program.
- Credit Counselors. Reputable credit counseling organizations are generally non-profit organizations that can advise you on your money and debts, and help you with a budget. Some may also help you negotiate with creditors. There are specific questions to ask to help you find a credit counseling organization to work with.
If you need help trying to decide what to do with your home, call us directly at 757-774-6069 or fill out form below.