Home mortgage forbearance of monthly mortgage payments.
April 16, 2020
If you are eligible you may qualify to defer making your mortgage payment for up to 180 days due to financial hardships you experience, either directly or indirectly, due to the COVID-19 pandemic.
On March 25, 2020 Congress passed legislation known as “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) for the purpose of providing financial relief to businesses and families suffering hardships resulting from the impact of the COVID19 pandemic.
Included in the CARES Act is section 4022 called “Foreclosure Moratorium and Consumer Right to Request Forbearance (page 210 of the CARES Act, pdf version). The two pages accompanying this document are photocopies of Section 4022 for your reference click here. In some cases, you may need to share these pages with your mortgage lender/servicer.
Does your mortgage qualify for this benefit?
It must be a one to four family mortgage. This portion does not apply to residential investment properties.
What is Forbearance?
Forbearance is essentially not having to make loan payments when due, without having your loan considered in default by the lender. No additional fees or costs will be assessed to you or your loan. This means if you don’t make your $900.00 monthly principal and interest payment on May 1 through October 1, those payments will be due when the final loan payment is made, often many years into the future.
Am I eligible for this benefit?
There are two criteria each recipient of this benefit must satisfy to qualify.
On the first page under (1) GENERAL, refer to the two criteria.
- Submit a request to the mortgage servicer (usually who you make your mortgage payments to) explaining your financial hardship due to, directly or indirectly, to the COVID-19 emergency.
- Your mortgage servicer is included in the list of 7 named organizations on page one of the attached pages shown in the paragraph (2) Federally Backed Mortgage Loan. Submit your request to them. Expect a response within a reasonable period of time. Not more than one week. Keep your communications in writing so you have a record of the conversations.
What is the cost to me?
There is no cost to you for this program.
How long can my payments be deferred?
Up to 180 days initially. If you can demonstrate the hardship continues beyond the first 180 days a second period of up to another 180 days is available.
Remember, the payments that are deferred, are not being forgiven. You will still be responsible for making these payments, just later in the loan amortization. This will increase the total interest cost because you may be ‘borrowing’ the loan balance for six months without making any payments. That interest will be added to the final payment due when you pay off your mortgage.
If your monthly payment includes an allocation for your real estate taxes, be sure to continue to budget for that amount so you are able to pay your real estate taxes on time. This forbearance program only applies to the principal and interest portions of each payment.
NOTE: Mortgage servicers will be willing to assist anyone experiencing legitimate financial hardships, either directly or indirectly as a result of the COVID-19 pandemic. The CARES Act does not offer any examples. Each mortgage servicer will be applying their standards. Provide them with the evidence they request to qualify for the benefits of this forbearance program.