If you have a federally owned or guaranteed mortgage and are not going to be able to make your monthly payment and have the below listed type of mortgages, you now have several protections and options due to the recent passing of the CARES Act in Congress.
Mortgages subject to the Act are:
- purchased or securitized by Fannie Mae or Freddie Mac;
- insured by the Federal Housing Administration (FHA), including reverse mortgages or Home Equity Conversion Mortgages (HECMs);
- guaranteed, directly provided by, or insured by the Department of Veterans Affairs (VA);
- guaranteed, directly provided by, or insured by the Department of Agriculture (USDA); or
- guaranteed under HUD’s Native American or Native Hawaiian Home Loan Guarantee programs.
These protections and options are:
- Any borrower with a federally-backed mortgage due to COVID-19 may request a forbearance, regardless of their delinquency status, by submitting a request to their servicer and affirming that their financial hardship is due to COVID-19. No documentation regarding the hardship needs to be submitted.
- This forbearance period shall continue for up to 180 days, and if the borrower requests an additional extension, they can obtain another 180-day forbearance.
- During the forbearance period, no fees, penalties, or interest shall accrue except for what is already allowed if the borrower were making timely payments.
- No servicer of a federally-backed mortgage may initiate a foreclosure, move for a foreclosure judgment, conduct a foreclosure sale, or proceed with an eviction from March 18, 2020 to May 17, 2020.
A mortgage forbearance is not a forgiveness of debt, and you will have to work out a loan modification or repayment plan with your lender or servicer at the end of the forbearance period to resume making payments, including all missed payments. The CARES Act is silent as to the kinds of loan modifications that will be offered. However, a common type of loan modification following a forbearance period extends the mortgage term for the length of the forbearance to allow the homeowner to resume making payments in an amount that is very similar to what you were paying prior to the forbearance. You can look up a HUD-approved housing counseling agency at https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
Homeowners who are suffering financial hardship, directly or indirectly related to COVID-19 should contact their servicer to request a forbearance. Homeowners will have to attest to financial hardship caused directly or indirectly by COVID-19 to receive a forbearance but are not required to provide any further documentation to prove such financial hardship.
If you are subject to an initiation of foreclosure proceedings, a continuation of foreclosure proceedings, or a foreclosure related eviction within the 60-day period beginning on March 18, 2020, you should contact your servicer immediately to demand an explanation. You may also contact the relevant federal agency or entity that is backing your mortgage or seek out legal assistance. You may want to submit a complaint with the Consumer Financial Protection Bureau through their complaints webpage at https://www.consumerfinance.gov/complaint/. You can also contact the CFPB via telephone by calling (855) 411-2372.