If you have been financially affected by the novel coronavirus (COVID-19) pandemic, you may be wondering how you will make the upcoming mortgage payments. There is help.
A new federal law, the Coronavirus Aid, Relief and Economic Security (CARES) Act, gives you two new financial safeguards when you have a federal mortgage:
- A moratorium on foreclosures
- Mortgage Forbearance
Connected: Special financial protection against foreclosure, eviction and repossession for active service members of the military.
If you don’t have a state mortgage, you may still have relief options from your mortgage service provider or from your state. However, many people have government-secured mortgages and are unaware of it. More than half of all mortgages are owned by Fannie Mae or Freddie Mac, which are federal agencies.
Nationwide secured mortgages include loans from such agencies as:
- Veterans Affairs Division (VA)
- The U.S. Department of Agriculture (USDA)
- The Federal Housing Administration (FHA)
- The US 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 are unsure whether your mortgage is covered by the government, you can check your mortgage papers or call your lender. You can also see here if your loan is covered by Fannie Mae or check here if your loan is covered by Freddie Mac.
The Foreclosure moratorium The law contained in the new federal law states that your lender or credit service provider will not be able to complete your mortgage between March 18 and May 17, 2020. This means that during this time he cannot begin the foreclosure proceedings or complete a foreclosure process, even if it was previously initiated on these dates.
Mortgage Forbearance basically means you either pay a lower monthly amount or temporarily suspend payments. According to the new law, you have the right to request a deferral for up to 180 days. After the original 180-day deferral has expired, you can apply for a further 180-day extension. The law says your lender cannot charge you any fees, penalties, or additional interest for indulging you.
The law does not require the lender to indulge you; most will, however. Late or partial payments are better for the bottom line than getting no money at all.
The best way to contact your mortgage lender to discuss mortgage payment options is online. The phone lines are pretty busy at this time. When you call, make sure you have all of your documents with you. Your lender may want to know your current financial and professional situation, how you expect your future situation, how many current savings and other bills you have, etc.
As always, when you get a deferral agreement with your lender, make sure you get everything in writing to keep yourself safe. With some deferral programs, you may owe all of your missed payments at once or additional payments at the end of the mortgage. So familiarize yourself with the final terms and keep all your records – just in case.
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