Coronavirus mortgage relief options

If you’re among those financially impacted by the coronavirus pandemic, you might be concerned about how to pay your mortgage or rent. Federal and state governments have announced plans to help struggling homeowners during this time.

Key points to know first

There is help available for many homeowners with mortgages, but first assess your situation.

If you can pay your mortgage, please pay your mortgage.

Refrain calling your mortgage services if you aren’t facing an immediate issue. Mortgage servicers are getting a lot of calls and need to first help those who won’t be able to pay their mortgage. Checking website would be a good option

If you can’t pay your mortgage, or can only pay a portion, contact your mortgage servicer immediately.

It may take a while to get a loan servicer on the phone. Loan servicers are experiencing a high call volume and may also be impacted by the pandemic. Please be sure to read this blog carefully so you are prepared for this conversation.

Reduce or suspend your mortgage, but understand how it works

As the economic impacts of the coronavirus pandemic begin to hit home, many Americans are worried about how they’ll make their mortgage payments, especially if they’ve been furloughed or laid off from their jobs.

The good news is mortgage lenders are quickly making accommodations. Mortgage giants Fannie Mae and Freddie Mac both have ordered lenders to be more flexible with borrowers, reducing or suspending payments for up to 12 months. That action alone covers half of the country’s home loans.

Other mortgage lenders are likely to follow suit eventually. But if your lender hasn’t set new policies yet and you’re facing an immediate mortgage crisis, there are steps you can take.

First off, and most important, don’t just stop paying your mortgage. Reach out to your lender and work with them to create a payment plan. That’s as easy as making a phone call.

Mortgage forbearance

Most lenders will offer a forbearance. That’s something to be cautious of, however.

A forbearance often only kicks payments down the road. So while you might not be able to pay a mortgage for several months, when that time period is over, you could be expected to deliver all the missed payments as well as the current one in a lump sum Or it could be spread over 3-5 months resulting in an increased payment for 4th or 5th month respectively. For many people, that could be a devastating blow.

Both Freddie Mac and Fannie Mae are ordering lenders to work with borrowers on a permanent plan to maintain or reduce monthly payments as necessary.

Mortgage modification

A better bet is to request a mortgage modification. This enables you to skip payments for a set period, then pay them back in a variety of different ways.

Some mortgage companies will spread the missed payments out over several months. Others, in the best-case scenario, will add the missed months to the end of your mortgage, extending the life of the loan, but not creating a financial hardship for you.

In the meantime, foreclosure sales and evictions in Freddie Mac– and Fannie Mae–owned homes have been halted until at least May 17. And delinquent payments will not be reported to credit bureaus.

Lender mortgage deferment plans

Major mortgage lenders are handling deferment requests in different ways. The best idea is to reach out to your lender directly. Their mortgage-assistance websites can also offer some basic information.
A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts in place two protections for homeowners with federally backed mortgages:

• 1. A foreclosure moratorium
• 2. A right to forbearance for homeowners who are experiencing a financial hardship due to the COVID-19 emergency

If you don’t have a federally backed mortgage, you still may have relief options through your mortgage servicer or from your state.

Keep reading as we’ll first explain what the different options mean. Then we’ll explain how you can figure out if your lender or servicer can offer you any of the forms of assistance available.

This blog provides below understanding:

Major mortgage relief options during the coronavirus pandemic

Mortgage forbearance

Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time. 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.

Depending on the kind of loan you have, there may be different forbearance options, check with your Lender/Servicer for available options.

Moratoriums suspend or stop foreclosure

Foreclosure is when the lender takes back the property after the homeowner fails to make required payments on a mortgage. Foreclosure processes differ by state.

What options do you qualify for?

Your mortgage relief options depend on who owns or backs your mortgage. Here we’ll explain how to find out what you qualify for.

Call your servicer.

It may take a while to get a loan servicer on the phone. Loan servicers are experiencing a high call volume and may also be impacted by the pandemic.
Your mortgage servicer is the company that you send your mortgage payments to each month.

• • 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 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?
• • Details about your income, expenses and other assets, like cash in the bank
• • 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.

• 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.