Coronavirus Mortgage Relief: What You Need To Know
Article From HouseLogic.com
By: Leanne Potts Published: April 07, 2020
It's a confusing time, but lenders are putting remedies, like forbearance, in place to help homeowners.
Mortgage lenders, and the federal agencies that regulate lenders, are putting coronavirus mortgage relief measures in place to ensure homeowners have options if they're unable to make payments.
Your first stop in the face of financial hardship is your lender or bank. Just keep in mind that lenders are working to figure out and implement the new mortgage relief polices outlined by the regulatory agencies. So, you might read one thing from the FHFA, a federal regulator, but your bank might be doing something else.
In addition, due to the number of homeowners affected by the pandemic, lenders are dealing with a crush of calls and online queries. Be patient, persistent, and prepared to spend time on hold.
Here are the resources you need now.
Federally Backed Mortgages If you have a mortgage backed by Federal Housing Administration (FHA), Veteran's Administration (VA), United States Department of Agriculture (USDA), Fannie Mae, or Freddie Mac, your loan servicer must offer you deferred or reduced mortgage payment options, called forbearance, for up to six months. This means you don't have to pay your mortgage and you won't be charged late fees, penalties, or interest while you can't pay.
Loan servicers for FHA, Freddie, and Fannie must provide an additional six months of forbearance if you request it.
Not sure who backs your own loan? Fannie Mae and Freddie Mac have loan look-up sites where you can find out who owns it, and how to get in touch with them.
Mortgages Not Federally Backed If your mortgage is one of the 5 million in the United States not backed by a federal entity, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which includes a coronavirus mortgage relief mandate, doesn't apply.
However, regulators have encouraged those lenders to work with borrowers who can't pay their mortgages, and most banks and other lenders are suspending mortgage payments or offering forbearance.
The level of relief you get will depend on who owns your loan. Contact your lender to find out what's available. Regardless of the type of loan you have, you must apply for coronavirus mortgage relief through their mortgage servicer. That's the entity that collects your monthly payments and decides how long the assistance will last. When you reach your mortgage servicer, you'll need to explain your situation and provide information about your income, expenses, and assets.
FORECLOSURES AND EVICTIONS
Federal officials have imposed a nationwide halt to foreclosures and evictions for more than 36 million Americans with home mortgages backed by the FHA, Fannie Mae, and Freddie Mac.
The moratorium only affects borrowers with mortgages backed by Fannie Mae, Freddie Mac, FHA, VA, and RHS (Rural Housing Service loans through the USDA). This doesn't apply to the roughly 35% of mortgages held in bank portfolios and private label securities. But some individual lenders are offering relief.
Some cities, counties, and states, including Delaware, Indiana, Kansas, Louisiana, New Hampshire, North Carolina, and Texas, have placed a moratorium on foreclosures. Check with your city, county, and state governments. Find state-by-state tallies online.
Another tool in your relief toolbox are housing counselors. Counselors can provide independent advice on buying a home, renting, defaults, foreclosures, and credit issues. The U.S. Department of Housing and Urban Development's look-up tool helps you find counselors in your state.
The CARES Act forbids lenders from dinging your credit score for missed payments on federally backed mortgages and student loans during your forbearance period. The federal government is also encouraging private lenders to suspend reporting late payments on eligible mortgages. The Consumer Financial Protection Bureau has more advice about protecting your credit.
By law, you can get a free annual credit report from each of the three credit bureaus: Equifax, Experian, and TransUnion. Note that these reports don't include credit scores. Equifax offers six free credit reports every 12 months through December 2026 if you sign up for a myEquifax account.
YOUR STUDENT LOAN
The CARES Act includes immediate relief for those who can't make their monthly payments on federally held loans due to coronavirus. All loan payments (both principal and interest) are suspended through Sept. 30, 2020, with no penalty. You don't need to apply for this program or contact your lender. It's automatic. If you keep making payments, they'll be applied entirely toward the principal. These suspended payments will count towards any student loan forgiveness already in effect. Some loans under the Federal Family Education Loan (FFEL) program and some Perkins Loans not owned by the Department of Education aren't eligible for suspended payments. Nor are private student loans owned by banks, credit unions, schools, or other private entities. If you can't make payments, contact your loan servicer to find out what options are available. Many are offering ways, like forbearance, to postpone payments. Not sure who your servicer is? Look on your most recent statement and contact the servicer immediately.
If your student loan is already in default, the relief act immediately suspends wage garnishments or tax refund deductions. They'll resume after the suspension ends.
Find out more about student loan relief at the Consumer Financial Protection Bureau.
The IRS has pushed back the deadline for filing and payment of federal taxes to July 15, 2020. Many states are following suit. Check with your state tax agency or with the American Institute of CPAs for details on deadlines.
YOUR REAL ESTATE TRANSACTION
If you're going to be buying or selling a home in the near future, find out if your county recording office can complete the deal online.
In addition, more than half of states, many under emergency state directive, allow for remote online notarization of documents. This makes it safe and easy to complete real estate transactions under social distancing orders. The number of states allowing remote notarization could grow as pandemic legislation expands.
Fannie Mae and Freddie Mac have provided detailed appraisal alternative guidelines, so homeowners and appraisers can practice social distancing on Freddie and Fannie loans through May 17, 2020.
FHA, VA, and RHS are also allowing variations on the usual appraisal protocol. Check with your servicer for details.
LOOK OUT FOR SCAMS
Fear breeds scams, and scammers are out in full force during the pandemic. Beware of third parties offering mortgage assistance and other help. Seek help from your lender directly.
For information on circulating scams, and guidance on identifying them, visit the Federal Trade Commission website.