Nobody has any sense of how long this coronavirus lockdown will last so the federal and state government have put in place forbearance programs allows everybody to press pause on their current circumstances and breathe. And take a look at what the world might look like in 6 or 12 months and plan for that.
Even if the economic turmoil is long-lasting, the governments will have to find ways to prevent foreclosures, which could mean forgiving some debt.
The risks of allowing foreclosures are too great because it would damage financial markets and that could infect the economy.
Borrowers must contact their lenders to get help and avoid black marks on their credit reports, according to provisions in the relief/stimulus package passed by Congress last week.
People want to pay their home mortgages, but are being asked/told not to work for the greater good of the country, so the governments, federal and state are coming in behind them with solid relief.
CARES Act Relief Options, some Facts, as follows:
If your mortgage is a federally backed mortgage, you have 2 mortgage relief options under the CARES Act:
- 1st, your lender or loan servicer may not foreclose on you for 60 days after 18 March 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.
- 2nd, 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 (a legal authorization to debtors to postpone payment) and forbearance (the action of refraining from exercising a legal right, especially enforcing the payment of a debt), if you are granted forbearance to delay making your monthly payments during this temporary grace period:
- You will not incur late fees
- You will not 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 1 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.
Have a healthy day, stay at home!