What You Need To Know About Mortgage Relief
If you are like so many people right now and you’ve suffered some loss of income, you might be wondering about mortgage relief. Many have suddenly lost their jobs or have had a reduction in hours or wages, or worse yet, have experienced a sudden illness that has disrupted income. There is struggle and you are looking for information on how to pay your mortgage.
Fortunately, many lenders are providing options on their own for those who are challenged during this time. There already appears to be options for people who cannot pay their bills. Many mortgage lenders are communicating options for their customers and are following government relief initiatives. We can show you what’s important so you can be on your way to breathing easy.
Understanding the Economic Security (CARES) Act:
On March 27, 2020, the CARES Act was signed into law. This governmental legislation is aimed to provide relief for both individuals and businesses that have been negatively impacted by the coronavirus pandemic. If you’d like to read the full Bill, you can read here but we’ll show you what you need to know.
While the bill addresses a variety of details, it provides the following items that can help provide you mortgage relief:
- It provides significant relief to mortgage borrowers for federally-backed loans through six months to a year of suspension or forbearance.
- During the forbearance, it prohibits lenders to charge late fees or interest.
- It prohibits lenders to report late or missed payment information to credit bureaus during the forbearance. Your account will be reported as “current”.
- It prohibits lenders from starting foreclosure proceedings on federally backed loans for at least 60 days starting on March 18
- It allows the borrower of a government-backed mortgage to halt or stop the forbearance at any time.
Those with mortgages owned by private lenders, such as banks, are not included in this relief. However, some states and banks have also rolled out relief for homeowners. If your mortgage is through a private bank, make sure you inquire with them what options you may have. You should also investigate if your state is offering any mortgage relief options.
What To Do
If you are struggling with your mortgage payments, here are 10 things you should do:
1. Assess your financial situation.
Review all possible income sources and look over all your bills to know where you stand.
2. Know Your Lender.
Are they a federal lender or a private bank?
You can check your mortgage documents. But you may need to call your mortgage lender and asked but it is good to know that many loans are backed federally or by government-sponsored agencies.
Loans made by the following agencies are eligible for relief under the CARES Act:
Federal Housing Administration
Department of Housing and Urban Development
Department of Veterans Affairs
3. Understand that your situation is unique.
Your current financial position and your financial history and experiences are specific to you. These influences may help you qualify for a solution.
4. Talk to your mortgage lender.
Communication is key to retaining your property and your good credit. While lenders are not foreclosing properties for the foreseeable future, it is still wise to let your lender know you are struggling. You show responsibility and lenders will work with you. Also, because new mortgage rules are changing quickly as the pandemic evolves, it’s important to communicate with your mortgage lender to find out the latest options available. If you can, utilize your lender’s website to submit questions. Be prepared for long waits if you opt to call your lender. They are fielding numerous requests.
5. Consider a mortgage forbearance.
This opportunity for a suspension of your payments will buy you some time to improve your finances.
6. Consider unemployment.
Look into if you qualify for unemployment wages. This could help you in paying your bills during the pandemic.
7. Get things in writing.
Make sure as you educate yourself on options and make decisions, you get things in writing.
8. Be wary of scams.
It is unfortunate that during an already difficult time, you may be targeted by scammers. Be aware of false promises to provide you financial relief from your mortgage. Be wary if an offer charges a high upfront fee, asks you to sign documents you don’t fully understand or has you submit payments to someone other than your mortgage lender.
9. Watch your credit.
Under the CARES Act, those who choose to receive mortgage forbearance will also receive credit protection. This means lenders cannot report your mortgage as late or missed. Ultimately, your mortgage will be considered “current” and you should not experience any drop in your credit score.
No matter what you opt to do, try to retain your good credit. Make sure you check your credit report for inaccuracies that you can fix.
10. Keep educating yourself.
Make sure you keep up with government news on mortgage relief options. Additionally, there may be options provided by lenders. Additional options may become available. If you opted for forbearance, make sure you watch your mortgage statements to avoid any errors.
Conclusion
We know this is a scary time. You are working to keep your home and make your mortgage payments. We hope we have provided you a starting point to explore options. You can now take action to be less stressed about your mortgage and on your way to getting some relief.