by Rachel Basinger, Contributor
If you are struggling financially due to the COVID-19 pandemic, there may be mortgage relief options available to you as a homeowner under the CARES (The Coronavirus Aid, Relief, and Economic Security) Act .
Under the CARES Act, borrowers who have federally-backed mortgages can suspend their monthly payments for up to 12 months due to lost income from COVID-19. We’ll dive into what exactly that looks like, as well as options for borrowers whose mortgage loan is not federally backed.
What Mortgage Relief Options are Available Under the CARES Act?
There are a variety of mortgage relief options under the CARES Act that should help you and your family out during this financially difficult time.
Up to 12-month forbearance: If you are experiencing financial hardship due to COVID-19, you can receive forbearance on federally-backed mortgages for up to 180 days with the opportunity to renew for another 180 days.
Up to 3-month forbearance: If you are a landlord with multifamily housing (5 or more units) and have a federally backed loan, you can receive forbearance for 30 days on payments and up to two 30-day extensions. Additionally, if you are a landlord receiving forbearance, you cannot evict or initiate the eviction of renters during the time that you receive forbearance.
No extra fees, penalties, or interest: During this time, servicers are not allowed to assess fees, penalties, or interest beyond what would have occurred had payments been made on time.
No reporting to credit bureaus: Lenders are not allowed to report late or missed payments for those in a forbearance plan.
Foreclosures and foreclosure-related evictions will be suspended: There is a 60-day moratorium on foreclosures and foreclosure-related evictions, beginning March 18, 2020. It does not apply to vacant or abandoned properties.
What Mortgages Are Backed By The Federal Government?
The text of the CARES Act lists the mortgages loans that are backed by the federal government:
Insured by the Federal Housing Administration (FHA)
Insured under section 255 of the National Housing Act
Guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992
Guaranteed or insured by the Department of Veterans Affairs
Guaranteed or insured, or made by the Department of Agriculture
Purchased or securitized by the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae)
How Can I Find Out if My Loan is Federally Backed?
If you’re still not sure if your loan is federally backed after looking at the list above, you have several options.
You can use Fannie Mae ’s or Freddie Mac ’s tools to find out if either of these government-backed providers own your mortgage or use the Mortgage Electronic Registration Systems (MERS) website to find your servicer if you don't know who that is. If you know which mortgage servicer you have, you can contact them to find out the details of your loan.
How Do I Request Forbearance on My Federally-Backed Loan?
To request forbearance, you will need to contact your servicer and let them know that you are experiencing financial hardship due to COVID-19, and you will receive forbearance. You do not need to submit any additional documentation.
If you have additional questions, you can visit Freddie Mac’s page or Fannie Mae’s page specifically focused on COVID-19 concerns.
What Mortgage Relief Options are Available to Me if My Mortgage is NOT Backed by the Government?
If you do not have a federally-backed loan, there may still be some options available to you.
First, you should contact your loan servicer to ask about your options. Some servicers have announced suspension for mortgage payments for eligible individuals due to financial hardship from COVID-19, so it’s definitely worth reaching out.
Additionally, some states and local governments have also instituted policies to assist homeowners dealing with financial hardship as a result of COVID-19, including the states of New Jersey, New York, and Washington, and the city of Chicago. So, check your state's government website for details.
Finally, although private lenders are not required to offer relief under the CARES Act, if you and your lender come to any type of loan modification agreement, your lender is not allowed to report reduced or paused payments to credit bureaus.
As a word of caution, it’s definitely a good idea to reach out to your lender even if you don’t have a federal government loan, but beware of third parties offering mortgage assistance. There’s a good chance that it could be a scam, so you’ll want to only go to your lender for mortgage relief.
What About When Forbearance Under the CARES Act is Over?
As a matter of policy, it’s good to stay up-to-date on when grace periods may be ending for mortgage relief.
However, under Fannie Mae , mortgage servicers will attempt to contact homeowners a month before forbearance ends to see what the next steps are. Currently, for Fannie Mae, this could be full repayment, short-term repayment plans, COVID-19 payment deferral, and loan modification. Freddie Mac has a similar plan, which does include loan servicers reaching out about a month before the current forbearance plan is expected to end.
If you have a loan owned by the FHA , you may also be eligible for standard mortgage forbearance, which can last up to six months or special forbearance if you are unemployed, which can last up to a year or more. The VA also has a special forbearance, which may help you after the CARES Act period.
This is definitely a challenging time financially for many Americans, and especially so if you’re struggling to make your mortgage payments. If you’re a homeowner facing financial hardship due to COVID-19, know that there are options available to help you if you need it.
A mortgage forbearance could mean that you won’t have to worry about making mortgage payments for a period of time while you deal with the financial implications of COVID-19. Remember, however, that this forbearance is not automatic and you will need to be proactive and speak with your servicer about wanting forbearance if you foresee missing any payments.
For more information regarding coronavirus mortgage relief options, the Consumer Financial Protection Bureau (CFPB) offers a guide for homeowners , including tips for what to do once you've received a mortgage relief option.
The content provided here and throughout the site is for information only, on the topic of financial wellness. Due to the volatility of the Coronavirus and the COVID-19 pandemic, details about the illness, public response, policy, and more, are subject to change. Please consult your state and local offices for the most accurate and up-to-date information about COVID-19 in your area; for global updates, consult the World Health Organization website at: https://www.who.int/emergencies/diseases/novel-coronavirus-2019