If you've been financially affected by the novel coronavirus (COVID-19) pandemic, you may be wondering how you are going to make upcoming mortgage payments. There is help available.
A new federal law, the Coronavirus Aid, Relief and Economic Security (CARES) Act, gives you two new financial protections if you have a federally backed mortgage:
- A moratorium on foreclosures
- Mortgage forbearance
If you don't have a federally backed mortgage, you may still have relief options through your mortgage servicer or from your state. However, many people have federally backed mortgages and don't know it. More than half of all mortgages are owned or backed by Fannie Mae or Freddie Mac, which are federal agencies.
Federally backed mortgages include loans from such agencies as:
- The Department of Veterans Affairs (VA)
- The U.S. Department of Agriculture (USDA)
- The Federal Housing Administration (FHA)
- The U.S. Department of Housing and Urban Development (HUD)
- The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae
- The Federal Home Loan Mortgage Corporation (FHLMC), also known as Freddie Mac
If you're not sure whether your mortgage is federally backed, you can check your mortgage paperwork or call your lender. You can also see whether your loan is backed by Fannie Mae here or check if your loan is backed by Freddie Mac here.
The foreclosure moratorium contained in the new federal law says that your lender or loan servicer cannot foreclose on your mortgage between March 18 and May 17, 2020. This means they cannot begin the foreclosure process during this time or finalize a foreclosure process, even if it was initiated prior to these dates.
Mortgage forbearance basically means that you either pay a lower monthly amount or suspend payments temporarily. Under the new law, you have the right to request forbearance for up to 180 days. After the original 180-day forbearance expires, you can request another 180-day extension. The law says that your lender can't charge you any fees, penalties or additional interest if it does grant you forbearance.
The law does not state that the lender must grant you forbearance; however, most will. Getting late or partial payments is better for its bottom line than not getting any money at all.
If you wish to contact your mortgage lender to discuss mortgage payment options, your best bet may be to contact it online. Phone lines are quite busy at this time. If you do call, make sure you have all your documents ready; your lender may want to know your current financial and employment situation, what you expect your future situation to be, as well as how much current savings and other bills you have etc.
As always, if you do get a forbearance agreement with your lender, make sure you get everything in writing to cover yourself. 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 and keep all your paperwork -- just in case.
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