While the vast majority of the country is still under quarantine lockdown, many citizens are facing a financial crisis. Stimulus checks have made it to most of the population, but for many, it may not be enough to keep up with expenses. Depending on whether additional funds will be released or businesses are able to reopen, a number of homeowners are concerned about whether they will be able to make their mortgage payments in the coming months.
As a part of the Federal Housing Administration’s Disaster Relief program, the Department of Housing and Urban Development (HUD) has financial assistance programs designed to help those in need. In these uncertain times, as a real estate agent, you’re able to provide information to your clients to help them maintain some control over their lives and finances. Here is a basic breakdown of the options and services available, so you can give your clients the best information.
Who qualifies for the program?
What is important to know is that only borrowers who are already delinquent on their loans are eligible for immediate relief. If your client is current on their payments, but they are now in the situation where they’re unable to pay, they should contact their lender about payment options, including waived late fees, deferment or forbearance.
For those who have already missed payments, the stipulations for qualifying for assistance are fairly straightforward. HUD has broken it down into three basic groups:
1. If you live within the boundaries of the declared disaster (in this case, the entire U.S. is affected), you are already covered by a 90-day foreclosure moratorium.
2. If someone in your household has been affected by the virus and has died, is missing or is incapacitated, you qualify for a moratorium.
3. If you are unable to make payments on your mortgage because you were financially impacted by COVID-19, you qualify for a moratorium.
In other words, if you or someone in your household has been financially impacted (unemployed, reduced hours, sick, hospitalized, etc.) due to the policies enacted in response to COVID-19, and you have already missed payments on your mortgage, you qualify for assistance. Keep in mind that this program is only eligible to those with federally-backed mortgage loans, including mortgages and deeds processed through Fannie Mae and Freddie Mac, insured by HUD, the VA or the USDA, or made directly through the USDA. If you or your client is unsure about whether they qualify, they should contact their lender for clarification or reach out to a HUD-approved counseling agency.
Should my clients be worried about foreclosures?
As a result of this assistance program, FHA lenders are not able to foreclose on any borrowers who have been affected by COVID-19, even if they are delinquent on their loans. One of the most important things you should communicate to your clients is that they need to reach out to their lenders immediately if they believe they will not be able to make their payments. Once lenders know that a borrower has been affected by the pandemic, they can begin processing information to stop any foreclosure action during the moratorium period.
Are lenders asking for proof of sickness or unemployment?
Generally, because of the sheer number of borrowers applying for assistance, many lenders are not requiring proof of hardship. Just in case, advise your client to obtain a copy of their layoff notice or a letter from their doctor stating the reason they’re not able to work.
Should clients ask for a deferment or forbearance from their lenders?
When discussion options with a lender, it’s important for your clients to understand the difference between a deferment and forbearance. As an agent, this is a time to shine, by giving them the best information in their time of crisis. If they’re unable to make payments, it’s in your client’s best interest to ask their lender to defer payments rather than asking for forbearance.
Deferring a loan is pausing your payments for a certain period of time. The amount of time you freeze your loan will be added on once you resume your payments. Forbearance, on the other hand, requires you to make up the payments you missed once the forbearance period is up. Your lender may agree to spread the amount over multiple payments, or they may request the full amount at the end of the period. You will also be gaining interest during this time.
The world’s population is unsure about what their lives will be like in the coming months, or even the coming days. Use this time to provide your clients with the best information possible and to be a support to them. Join the Secrets of Top Selling Agents Facebook Group for the latest news and business tips to keep your business going during these uncertain times.
Mark Mathis is vice president of Sales for Homes.com. For more information, please visit marketing.homes.com.