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A Guide to Home Mortgage Relief During the Pandemic
With the coronavirus heavily impacting the United States’ economy, homeowners have been asking for help managing their mortgages. Involvement in forbearance programs allows civilians to delay their payments or make partial payments for extended periods of time. With 3.5 million people utilizing this program, they have found temporary relief, but the process is puzzling. Below we’ll discuss what you need to know.
What to do if you’re having difficulty paying your mortgage
According to the federal CARES Act, a civilian with a federally supported forbearance mortgage is allowed to pause paying their mortgage payments for 6 months as long as they have faced difficulties during the pandemic. In order to take advantage of the extended time limits, you must be undergoing some pandemic-tied difficulty, but there is no regulation to monitor the size of the difficulty. After the 6 month payment pause, you can request another 6 months. According to the federal Consumer Financial Protection Bureau, your forbearance should not have any added fees/interest or penalties. However, if you have a private mortgage, the right to forbearance does not apply to you, but there are measures to help those circumstances.
Determining if your mortgage is federally supported
Most U.S. mortgages are supported by the federal government though Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Veteran Affairs, or the U.S. Department of Agriculture. Usually, you submit payments to a private mortgage servicing company, which then passes your payments along to the government investors that retain ownership of your mortgage. According to the CFPB, your mortgage service must tell you who supports your loan. The information may also be listed on your mortgage documents.
How to start the forbearance process
You may call your mortgage service or apply online. It is recommended by the CFPB that you receive written paperwork to confirm the terms of the forbearance agreement. If you are having trouble applying, you can file a complaint against your mortgage service with the federal consumer finance agency. There are also HUD-approved housing counselors that can help guide you.
How to continue mortgage payments after forbearance
You still have to pay the postponed payments, but it is not mandatory to pay it all at once if you have a government-backed loan. There has been a lot of confusion circulating the terms of repayment, but government agencies are releasing guidance to mortgage servicers on the types of repayment plans that must be offered if the individual cannot pay all at once. You are allowed to make partial payments during your forbearance period to minimize the total payment in the future. To pay back the payments you’ve missed, methods will vary based on the type of loan you have, but government agencies have stated that your mortgage service must use a given list of options to find a comfortable, affordable repayment plan. Some options include paying a higher mortgage rate each month until the payments are complete. Others keep your monthly payments the same and put your missed payments into a separate no interest loan that is required to be paid off when your main mortgage has been completed. There are also options to maintain your original mortgage payments and extend the terms of the loan.
To read Andrew Khouri’s full article, click the link below.
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