COVID-19 has left a significant portion of the population in financial distress and the impact that this has had on homeowners and mortgage lenders is sure to be long-lasting. Fortunately, many lenders and other relevant organizations are stepping up to offer a little relief, but how will this relief affect you as a homeowner?
Covid-19: Mortgage Payment Relief, What it Means For You
As a real estate attorney in St. Petes, the mortgage payment relief associated with COVID-19 is of particular interest to WeidnerLaw. It also happens to be of great interest to many of our clients, which is why today we want to touch on available mortgage payment relief options and how they may affect you. But first, let’s take a quick look at some terminology that may be helpful for you to understand as you navigate these waters…
Forbearance – When we talk about forbearance, we are talking about a lender or mortgage servicer allowing you to pause or reduce your payments to them for a select period of time. Forbearance is NOT a way to wipe out money that you owe to the lender, you will have to repay this money at some point in the future.
The CARES ACT – The CARES ACT is a $2 trillion USD act that was passed by the U.S. government as a result of the coronavirus. CARES stands for Coronavirus Aid Relief and Economic Security. This act is divided into two sections that are referred to as “Division A” and “Division B”. Division B is of particular importance to us because it includes provisions for $65,000,000 for “community development” which includes economic and housing impacts that resulted from COVID-19.
The Consumer Financial Protection Bureau – The CFPB is an organization that is currently working alongside the Federal Housing Finance Agency and the U.S. Department of Housing and Urban Development to help renters and homeowners in crisis during COVID-19.
Mortgage Relief Options
- For federally or GSE backed mortgages, lenders and loan servicers may not foreclose on homeowners until AT LEAST June 30, 2020.
- Federally or GSE backed mortgage holders who are experiencing hardship due to the Coronavirus may request and be given a forbearance of as much as 6 months at a time. This can be requested for a maximum of 12 months.
Late Fee Relief
During the forbearance plan period, late fees are not assessed on mortgage payments. This is intended to help (if only slightly) defray the accumulation of debt and financial hardship.
Repayment options at the end of the forbearance period vary depending on the issuer of your mortgage. Some of the options available include:
- Paying all missed payments at once after the forbearance period
- Spreading out the missed payments over a period of months
- Paying the missed payments as a single payment at the end of the mortgage
The current situation has led to some foreclosure intervention tactics too.
Federal law states that a mortgage lender may not begin the foreclosure process until the loan is 120 days past due. States are also implementing their own foreclosure limitations and “moratoriums” during this time. A significant number of states have simply halted all eviction court proceedings for the time being. Other states, like California, have not only banned judicial foreclosures and evictions, but they have done so until three months after the current state of emergency has expired.
Protection For Renters
Protections during this period aren’t limited to homeowners, there are also protections in place for renters who have fallen behind on payments due to the coronavirus. The biggest protection being the limitations on foreclosures and evictions which, again, are established by the state.
Consumer Protections During Covid-19
There are a number of “special” consumer protection regulations and adjustments to current regulations that have been made specifically with COVID-19 in mind. To find an up to date list of consumer protections that can offer you a little more reassurance when it comes to your financial circumstances, keep an eye on the NCLC’s web page on COVID-19 & Consumer Protections. This page is a good resource to bookmark too since it will update with any changes and maintain current records for your reference.
Fight Against Illegal Evictions!
Are you facing financial hardship due to COVID-19 and being threatened with eviction? Don’t waste any time, retain a reputable real estate attorney today and don’t let your mortgage company bully you out of your home!