We are now about a month into this financial crisis and if you have lost your job or have reduced hours at work, I’m sure you’re worried about how you will make your mortgage payment when it comes due. Thankfully, the CARES Act provides some relief for homeowners. Here are the top 5 things you must know about the CARES Act as it relates to your mortgage.
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The CARES Act only applies to federally backed mortgages- A federally backed mortgage is a mortgage that is guaranteed by FHA, VA, or the USDA, or that has been sold to Fannie Mae or Freddie Mac. Approximately 70% of the mortgage loans in the United States are either federally guaranteed or owned. You can check your loan documents to determine if you have federally guaranteed loan but it is a little harder to determine if you loan has been sold to Fannie or Freddie. Here is the link to determine if your loan is owned by Freddie Mac: https://ww3.freddiemac.com/loanlookup/ Here is the link to determine if your loan is owned by Fannie Mae https://www.knowyouroptions.com/loanlookup
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No foreclosure or eviction following foreclosure until May 17, 2020- If you have a federally backed mortgage loan, the servicer is not allowed to initiate or finalize a foreclosure until May 17, 2020. If you are currently delinquent on your mortgage, this is good news because it gives you at least another month to work something out with your lender to stay in your home. However, after May 17th, unless the provisions of the Act are extended, I expect servicer will move forward with foreclosures.
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You may be entitled to a forbearance-If you believe that you are suffering financial hardship, either directly or indirectly due to COVID-19, you are entitled to a 180-day forbearance. All you have to do is ask your servicer for the forbearance and they are supposed to give it to you. Although you will be required to certify that you are suffering financially due to COVID-19, no documentation needs to be provided to support your assertion. If it turns out 180 days isn’t enough time for you to get back on your fee, you can ask to have the forbearance extended by an additional 180 days. This means you could potentially go a full year without making your mortgage payment. Another key thing to know is that during the forbearance period, the servicer is not allowed to charge fees and penalties for missed payments.
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Payments missed during the forbearance period are not forgiven- You will be required to make up the missed payments somehow. A plan must be developed to get your loan current at the end of forbearance period. Loan modifications will likely be offered by the servicers but as of right now, we are not sure what modification programs will be available for homeowners. I would expect to see some further guidance from the Federal government on this issue in the months to come.
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If you do not have a federally backed mortgage, there may still be hope! -Privately owned mortgages, although not required to, are offering similar forbearances to people who are struggling financially.
I know this is a very stressful time and its extremely scary to think about the possibility of losing your home. However, I encourage you to be proactive. Call your servicer and find out what options are available to you.
Hopefully this information is useful to you and it gives you some peace of mind, knowing that you have options to keep your home.
The Golden Law Group is here to guide you through this financially difficult time. And remember, together, we will get through this.
Don Golden
