If you're among the millions of people who've been financially impacted by the coronavirus (COVID-19) outbreak, you might be concerned about how to pay your upcoming bills, like your mortgage. Federal and state governments, various financial institutions, and loan servicers have announced initiatives to help struggling homeowners during this national emergency. Your options generally depend on what kind of loan you have, like a Fannie Mae, Freddie Mac, FHA, VA, USDA, or another loan type.
Get the latest on how to defer your mortgage loan payments, foreclosure moratoriums, other loan relief options, and more.
Yes, you're still obligated to make your mortgage payments during the COVID-19 pandemic unless you've worked out other arrangements with your loan servicer. If you think you're going to have trouble making your upcoming payments because of coronavirus, the first thing you should do is get educated on what relief options are potentially available for your kind of loan.
If you have a "federally backed mortgage loan," and you're experiencing a financial hardship that's due directly or indirectly to COVID-19, you can get a CARES Act forbearance (sometimes called a "COVID-19 forbearance"), regardless of the loan's delinquency status. "Federally backed mortgage loans" include loans that are guaranteed or made by a federal agency, like the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the Department of Agriculture (USDA), or owned or securitized by Fannie Mae or Freddie Mac. With this type of forbearance, your mortgage payments are suspended or reduced for up to 360 days. In some cases, you can extend the forbearance beyond this time frame.
Homeowners with federally backed mortgage loans also get access to special mortgage-payment relief options, including various kinds of loan modifications and payment deferral programs in which the lender defers repayment of forborne payments until the end of the loan.
Even if your loan isn't federally backed, most servicers are offer forbearances and other forms of help to homeowners affected by COVID-19, including payment deferrals after coronavirus-related forbearances. Also, your state might provide specific protections or programs for mortgage borrowers. Arizona, California, Connecticut, Massachusetts, New York, Rhode Island, and the District of Columbia, for example, give borrowers facing a financial hardship due to coronavirus the opportunity to get a forbearance. Check your state government's website to find out about available mortgage assistance.
Once you know what's generally available for your situation, contact your loan servicer. If you want a CARES Act forbearance or another specific type of relief, ask for it. You can also inquire about what other alternatives are available. Be aware that your servicer might not tell you about every available option or could give you incorrect information. That's why you should learn what options are potentially available before you call—so you'll know if you're getting bad information. Additionally, depending on which entity owns or insures your loan, you can contact that entity to learn about potential assistance.
Yes, but probably not right away and not if a foreclosure moratorium is in effect. If you're not covered by a moratorium and don't work out a forbearance or another loss mitigation option, you'll most likely face a foreclosure—though, in most cases, not immediately. Generally, federal law prevents a foreclosure from starting until the borrower is more than 120 days delinquent on the loan.
When a foreclosure moratorium ends, the servicer can initiate or continue with the foreclosure process, subject to any restrictions under federal or state law. Again, federal law generally prohibits the servicer from starting a foreclosure until you're more than 120 days behind on your payments. (Whether the federally-mandated 120-day waiting period can run concurrently with a foreclosure moratorium is unclear at this point.) Federal law provides other preforeclosure protections, too. State law might also require the servicer to send certain preforeclosure notices or comply with other requirements before the process can start. And keep in mind that if you have a federally backed mortgage loan, you can get a CARES Act forbearance regardless of delinquency status. So, even if you're behind in payments, you're eligible for the forbearance.
And, in the meantime, don't ignore phone calls or letters from your servicer. Communications from your servicer will likely explain any options you have to avoid a foreclosure and how to apply for those options. Also, don't disregard documents from the court or a foreclosure trustee. Correspondence from the court or a trustee will contain foreclosure information, including important dates—like the sale date—and details about your rights during the process. (Learn the do's and don'ts when facing a foreclosure.)
Under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, homeowners with federally backed mortgage loans who've been financially affected by COVID-19, regardless of delinquency status, can get a forbearance. ("Federally backed mortgage loans" include loans that are guaranteed or made by a federal agency, like the FHA, VA, or USDA, or owned or securitized by Fannie Mae or Freddie Mac.) With this kind of forbearance, you get a reduction or suspension of mortgage payments that will last up to 180 days, which can be extended up to 180 additional days (perhaps longer for some kinds of loans). Don't just quit making your mortgage payments, though. To get a forbearance, you have to contact your servicer and affirm that you've suffered a financial hardship due to the COVID-19 emergency. But you won't have to provide any other supporting documentation beyond this attestation.
Also, homeowners with federally backed mortgage loans get distinct mortgage-payment relief options. For example, borrowers with these kinds of loans have access to special payment deferral options, repayment plans, and particular types of loan modifications, even after a forbearance. Contact your servicer or the entity that owns or guarantees your loan to learn about available options.
If you have a loan that isn't federally backed, most servicers and lenders offer alternatives to foreclosure. You might qualify for a repayment plan, forbearance, loan modification, short sale, or deed in lieu of foreclosure. Also, your state might provide specific protections or programs for mortgage borrowers. Arizona, California, Connecticut, Massachusetts, New York, Rhode Island, and the District of Columbia, for example, give borrowers facing a financial hardship due to coronavirus the opportunity to get a forbearance.
Contact your servicer as soon as you think you might miss a payment, or shortly after you miss one, to find out if you qualify for a foreclosure alternative. The sooner you deal with the problem, the better. You might also consider talking to a lawyer or speaking to a HUD-approved housing counselor to find out what options you have. And check your state government's website to find out about available mortgage assistance.
With a forbearance agreement, the lender gives you permission to make reduced mortgage payments—or no payments at all—for a limited amount of time. Forbearance agreements typically last three to six months, though a more extended period might be possible, like in the case of a CARES Act forbearance (sometimes called a "COVID-19 forbearance"), which lasts up to a year, longer in some cases
At the end of the forbearance period, you start making payments again. But getting a forbearance isn't the same as loan forgiveness; so, you'll still owe the amounts you skipped paying after a forbearance ends. Lenders usually offer a few ways to pay the amounts that you didn't pay during the forbearance period. For example, you can usually:
Or the lender might agree to let you pay the skipped payments at the end of the loan—called a payment deferral option—which is common following a coronavirus-related forbearance.
Your options depend on what entity owns or guarantees your loan. If you have a federally backed mortgage loan (loans that are guaranteed or made by a federal agency, like the FHA, VA, or USDA, or owned or securitized by Fannie Mae or Freddie Mac), you won't be on the hook to make a lump-sum payment unless you can afford to do so. If some other entity owns your loan—like a bank, mortgage company, or securitized trust—your options depend on what that particular entity offers. To get information about the alternatives, contact your servicer and the loan owner, and check their websites. You can also talk to a lawyer or a HUD-approved housing counselor.
To get a forbearance, contact your loan servicer and ask for one. If you're eligible for a CARES Act forbearance, you'll have to affirm that you've suffered a financial hardship due to the COVID-19 emergency. But the servicer can't require you to submit any other supporting paperwork. If your mortgage loan doesn't qualify for a CARES Act forbearance, you might have to provide some more information or submit an application to get the forbearance or another loss mitigation option.
If you get a forbearance under the federal CARES Act, you have the legal right to stop the forbearance at any time. If you have another kind of forbearance, contact your loan servicer to learn whether you're able to discontinue your forbearance and go back to making your regular monthly payments.
If you get a CARES Act forbearance, interest still accrues during the forbearance period. But the servicer can't add additional fees or penalties, or charge interest beyond what would usually be charged to your account as if you made all contractual payments on time and in full under the terms of the mortgage contract. If you get another kind of forbearance, contact your loan servicer to learn whether you'll be charged penalties, interest, or late fees. If the servicer offers you a payment deferral option based on an incomplete loss mitigation application, it has to waive all existing late charges, penalties, stop payment fees, and other similar charges once you accept the deferral option.
Also, the servicer has to report your loan account as "current" to the credit reporting if you weren't already behind when you entered into the forbearance agreement. Though, it might add a comment to your reports noting that you're in a forbearance.
A foreclosure attorney can give you advice about what to do in your situation, help you enforce your rights under the law, and inform you about any orders or policy changes concerning foreclosure that have recently happened as a result of the coronavirus national emergency. Once you've decided that using a foreclosure attorney is in your best interest, ask friends, family members, coworkers, and other attorneys for referrals. You can also look for a suitable lawyer using an online directory or by going through your local or state bar association.
Most industries, including the legal profession, have changed their usual business practices due to the coronavirus pandemic. Typically, law firms have limited in-person contact with existing and potential clients. They've found ways to implement sufficient precautions, like adhering to social distancing protocols, while still giving assistance to those who need it. Lawyers now often offer help by conducting initial consultations and subsequent communications over the phone, email, text, and videoconferencing. (Learn more about how to find, hire, and work with a foreclosure lawyer while adhering to quarantine and social distancing rules during the COVID-19 outbreak.)