If you've recently fallen behind on mortgage payments, or think you soon will, due to the coronavirus (COVID-19) pandemic, relief might be available. You can ask for a forbearance, which provides temporary payment relief, or apply for a more permanent loss mitigation option, like a loan modification.
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, homeowners with a federally backed mortgage loan, regardless of delinquency status, who're experiencing a financial hardship due directly or indirectly to COVID-19, can get a forbearance, sometimes called a "COVID-19 forbearance" or "CARES Act forbearance." (A "forbearance" is when your loan servicer or lender allows you to stop making your mortgage payments for a limited time.)
Again, the right to get a forbearance applies to federally backed mortgage loans. Basically, a "federally backed mortgage loan" is one that is:
If you're not sure whether your loan is federally backed, you can get that information from your servicer.
The forbearance period will generally last as long as 180 days (six months) and can possibly be extended.
To get the forbearance, you need to make a request to your loan servicer and affirm that you've suffered a financial hardship due to the COVID-19 emergency; the servicer can't require any additional documentation beyond your attestation.
Fannie Mae and Freddie Mac haven't issued any guidance giving a deadline to request an initial forbearance. The latest guidance from Fannie Mae (Lender Letter LL-2020-02) says that its forbearance policies are "effective immediately and are effective until Fannie Mae provides further notice, unless otherwise stated."
Similarly, Freddie Mac's issued Bulletin 2020-4 states that the forbearance plan guidelines announced in the bulletin are effective immediately. The bulletin also says, "Freddie Mac will continue to monitor the situation and may revise or revoke this temporary guidance at any time, as appropriate."
So, it's currently unclear exactly how long borrowers get to request forbearances for Fannie Mae and Freddie Mac mortgage loans. It's reasonable to assume you may request a CARES Act forbearance until these entities issue further guidance. Most likely, you may request an initial COVID-19 forbearance while the COVID-19 National Emergency is still in place.
The FHFA announced that borrowers with Fannie Mae and Freddie Mac-backed loans could extend their forbearances for another three months after the initial 180-day forbearance and 180-day extension expire. To get the forbearance extension, borrowers must have a COVID-19 forbearance plan in place on or before February 28, 2021, and other limits might apply.
In addition, a COVID-19 payment deferral can cover missed payments. With a deferral, borrowers repay the skipped payments when the home is sold, refinanced, or at mortgage maturity.
In late September 2021, the U.S. Department of Housing and Urban Development (HUD), VA, and USDA announced that if your loan is FHA-insured, VA-guaranteed, or a USDA direct loan, you may request an initial COVID-19 forbearance up until the COVID-19 National Emergency ends.
For FHA-insured loans, if the initial forbearance date is March 1, 2020 to June 30, 2020, you can get two six-month forbearances and two additional three-month forbearances. If the initial forbearance date is July 1, 2020 to September 30, 2020, you can get a three-month extension after the initial two 180-day periods. If the initial forbearance date is October 1, 2020 to June 30, 2021, you can only get two six-month forbearance periods. And you can get a six-month forbearance and six-month extension if your initial request is made between July 1, 2021, and September 30, 2021.
If you request an initial 180-day forbearance on or after October 1, 2021, you can get an additional six months if the forbearance is exhausted and expires before the end of the COVID-19 National Emergency.
The VA website says that borrowers with VA-guaranteed loans can get up to six months of additional mortgage-payment forbearance in three-month increments if they entered a forbearance on or before June 30, 2020.
VA expects all COVID-19 forbearance periods to end by September 30, 2022. (See VA Circular 26-21-20, dated September 29, 2021.)
USDA announced that borrowers who received an initial CARES Act forbearance may be granted up to two additional three-month payment forbearances. The borrower must request each extension individually. (The initial forbearance period may be up to 180 days and the borrower may request an extension of up to an additional 180 days.)
It's important to note that a forbearance isn't the same as forgiveness. You'll still owe the amounts you skipped paying after the forbearance period ends. So, it's probably not a good idea to request a forbearance if you can afford to make your payments.
Usually, after a forbearance, you can pay the skipped amounts:
Your options depend on what entity, like FHA, VA, USDA, Fannie Mae, or Freddie Mac, owns or guarantees your loan, and you probably have alternatives. Under official loan servicing guidelines, the servicer can't require you to get caught up with a lump sum if you're unable to afford it, and you have an FHA, VA, USDA, Fannie Mae, or Freddie Mac loan.
Learn about your rights before you request a forbearance so you'll know if your servicer is giving you bad information. Be sure to document any agreement you make with the servicer. Ask your servicer to provide written documentation that confirms the details of what you've discussed.
You can also take screenshots or extensive notes about a phone call. Keep track of when you called and whom you spoke to. Save emails and other communications you receive. Again, if you need help enforcing your rights, consider hiring a foreclosure lawyer to help you.
During the forbearance period, the servicer can't charge fees, penalties, or interest beyond the amounts scheduled or calculated as if you made all contractual payments on time and in full under the terms of the mortgage contract.
Under the CARES Act, if you make an agreement with your servicer (or another creditor) to defer one or more payments, make a partial payment, forbear any delinquent amounts, modify a loan or contract, or get any other assistance or relief—called an "accommodation" under the law—because you were affected by COVID-19, the servicer has to report the account as current to the credit reporting agencies if you weren't already delinquent.
This protection is available beginning January 31, 2020, and ends 120 days after enactment, or 120 days after the date the national emergency declaration for the coronavirus is terminated, whichever occurs later.
But you have to come to an agreement with the servicer first to avoid adverse reporting, and you have to stick to the terms of the agreement. Don't unilaterally stop making your payments, delay your payments, or short them.
And, if you were already delinquent at the time of the agreement, the servicer can keep reporting the delinquent status unless you bring the account current. In the case of a charge-off, the creditor may continue to report it as a charge-off.
Even if your loan isn't federally backed, your servicer might offer you a forbearance or another form of relief, like a waiver of late fees or a loan modification. Also, your state might provide special protections or programs for mortgage borrowers.
Contact your loan servicer, talk to a lawyer, or speak to a HUD-approved housing counselor to find out what options you have. You can also check your state government's website to find out about available mortgage assistance. If you're able to work something out with the servicer, the law prohibiting adverse credit reporting applies.
Call your loan servicer to learn more. Also, a HUD-approved housing counselor can explain these options to you in more detail and can help you if you're having trouble getting information from your mortgage servicer. Go to hud.gov to find a housing counseling agency near you or call toll-free 800-569-4287.
Other mortgage help is available, too.
If you need a more permanent solution, say after a forbearance period ends, you may apply for a loan modification or another option. Fannie Mae and Freddie Mac offer eligible homeowners modifications, often after a forbearance. Homeowners with FHA-insured loans have access to FHA's suite of loss mitigation options. VA-backed loans can be modified as well. Most banks and mortgage lenders offer in-house ("proprietary") modifications if you have another type of loan.
Under federal law, the servicer generally doesn't have to review more than one loss mitigation application from you unless you bring the loan current after applying. But considering what's happening with COVID-19, even if you already applied, it's worth contacting the servicer again to find out if help is available. If your loan is owned or insured by Fannie Mae, Freddie Mac, FHA, VA, or the Rural Housing Service, you can contact that entity too to find out about mortgage-payment relief.
Contact your loan servicer to get specific information about what kind of relief is available in your circumstances. A local foreclosure lawyer can advise you about your legal rights under federal mortgage servicing laws and tell you about any state laws that could protect you as well. A HUD-approved housing counselor can provide you with helpful information (at no cost) about different loss mitigation options.