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The Cares Act info-What to do if you cannot pay your mortgage during Coronavirus crisis
The CARES Act helps ease some of the financial burden on homeowners with help thru a government-backed loans. Homeowners with these loans who have lost income due to the COVID-19 can suspend mortgage payments for up to 12 months. This law also pauses foreclosures, foreclosure-related evictions, and changes credit reporting during the health crisis.
In the mortgage industry, we call “pausing payments” forbearance.
Read on to learn how you may benefit from the CARES Act.
The CARES Act and Your Mortgage
The new law only applies to mortgages that are:
Backed by the Federal Housing Administration (FHA)
Included under sec. 255 of the National Housing Act
Included in sec. 184/184A of the Housing and Community Development Act of 1992
Backed by the Department of Veterans Affairs (VA)
Backed by the Department of Agriculture (USDA)
Held by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation
About Forbearance under the CARES Act
The CARES Act states that if you are experiencing financial hardship due to Coronavirus, you can pause payments for up to 180 days plus have the option to extend it for another 180 days.
If you’re a landlord of a multifamily property (5+ units), you have similar protection. You can pause payments for 30-days plus request additional two 30-day extensions.
How to Request Forbearance
To pause your payments, you’ll need to submit a request to your servicer –that is, the lender you make mortgage payments to. Within the application, you’ll need to affirm that the hardship is due to COVID-19. Note that no further proof is required.
The rules for landlords are a bit different. Your payments must be current as of Feb. 1, 2020, to qualify.
What Happens During Your Forbearance
During the forbearance period, you won’t be charged any penalties, interest, or fees that you would have been charged had you made your mortgage payment as usual.
Landlords may also not charge their tenants any late rent fees during the forbearance period granted to the landlord.
No Reporting to Credit Bureaus
The CARES Act also states that lenders shall not report late or missed payments to the credit bureaus if your mortgage is in one of the forbearance programs.
This rule applies through July 25, 2020, or 120 days after the end of the crisis period, whichever is later.
No Foreclosures or Evictions
The CARES Act also protects from eviction. Your loan servicer cannot initiate a foreclosure or foreclosure-related eviction action before May 17, 2020.
Never abruptly stop making payments if your loan is not in forbearance you could face foreclosure and eviction.
The feds have also provided relief in the form of dropped mortgage rates. Contact us today to review refinancing your current loan!
