The shutdown of businesses across the United States has left many homeowners unable to pay their mortgages and other bills. The federal government has responded by adopting the Coronavirus Aid, Relief, and Economic Security Act, also known as the “CARES Act,” to help people who are financially strapped due to the coronavirus.
How the CARES Act can Help Homeowners
The CARES Act placed a moratorium on foreclosures for federally backed mortgages. A servicer of a federally backed home loan may not initiate a judicial or nonjudicial foreclosure process, seek a foreclosure judgment or order of sale, or execute an eviction or sale related to a foreclosure for a period of at least 60 days starting on March 18, 2020. A foreclosure can only proceed if a property is vacant or abandoned.
If you have a federally backed home loan and you have suffered a financial hardship directly or indirectly related to the coronavirus, you can contact your loan servicer and request forbearance to halt or lower your mortgage payments for 180 days. Once the forbearance has ended, you can request an extension for an additional 180 days if you are still unable to pay your mortgage.
Forbearance must be granted to any borrower with a federally backed mortgage who requests it because of a hardship related to COVID-19. You will not have to provide any documentation to prove that you are experiencing a hardship. You can request forbearance even if you were already behind on your mortgage payments.
During the forbearance period, no fees, penalties or interest may be charged, other than those that would have been charged if you had made payments on time. If you postpone making mortgage payments, you will still have to pay the money later.
How to Find out if You are Eligible for Forbearance
Federally backed loans may be backed by Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Veterans Affairs or the Department of Agriculture. If you aren’t sure if your mortgage is federally backed, you can check your loan documents or your most recent mortgage statement. Fannie Mae and Freddie Mac also have websites where you can find out if they back your loan.
Other Sources of Relief
If you don’t have a federally backed mortgage, you may be able to get help through a state or local order or program. Some governors, mayors and state courts have placed a moratorium on foreclosures. They vary in terms of who is eligible, what kinds of protections they provide and how long those protections will be available. Some lenders have suspended foreclosures for varying amounts of time and are offering a variety of options to their customers. Research state and local programs and visit your lender’s website to learn about any policies it has implemented to help borrowers suffering from the financial effects of the coronavirus.