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COVID-19 Mortgage Assistance Programs From Banks and Lenders: What You Need to Know

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There is no doubt that the world has been turned upside down because of the COVID-19 global pandemic. Most states have enacted shelter in place orders, and schools are shut down.

Unless a business is deemed essential, workers are idle. Millions of workers are home facing unemployment and uncertain times.

In late March, Congress passed the CARES Act relief package for Americans and American businesses navigating these uncharted times.

On top of being quarantined to homes, now so many Americans are worried about how they will make their next mortgage payment.

Read on to learn about how to find and get mortgage assistance during these challenging times.

Assess Your Situation

You need to carefully consider your needs. The banks and the mortgage industry do not want to face another housing market collapse. So, more than likely they will work with you. But you need to have a good handle on your situation.

Can you afford to pay your mortgage? If you can afford to pay it, you should. Even if you are worried down the road that you may face hardship. Let the people who are right now facing hardship get through for help.

If you know you are going to have difficulty paying your mortgage, contact your lender right away.

CARES Act Relief

There is some relief for some Americans in the CARES Act passed by Congress. It will not help everyone but start there to see if you qualify for the help outlined in this package.

Two types of relief can be sought from the package. Let’s take a closer look at each.

  1. If you have a federally backed loan, it prevents the lender from starting foreclosure proceedings for 60 days. This provision was effective on March 18, 2020.
  2. For those who are experiencing financial hardships as a result of COVID-19, you can request a forbearance. This provision could be in place for up to 180 days.

Forbearance

What exactly does forbearance mean? If you are granted a forbearance, it means you can pause or reduce your mortgage payments. This forbearance does not mean your loan is forgiven during this time.

When the 180 days is up, you can request up to another 180 days if you are still experiencing hardship as a result of COVID-19.

Who Owns Your Loan?

Here is where you need to have an understanding of your situation. You need to know who owns your mortgage.

  • Is your mortgage through a private lender and not government-backed?
  • Do you have a government-backed loan through your lender?

Government-backed loans would go through your lender and these government agencies:

  1. Federal Housing Administration
  2. Department of Housing and Urban Development
  3. Department of Agriculture
  4. Department of Veterans Affairs
  5. Freddie Mac
  6. Fannie Mae

Well over half of all mortgages in the last year were set up through one of these agencies. That is good news (and you all need some) because if your loan is federally backed you qualify for the relief established in the CARES Act.

Understanding the Terms of Forbearance

This caveat is an important one for mortgage holders to understand and consider closely. When you talk with your lender about a possible forbearance, make sure you are very clear on the terms.

There are a few scenarios that could happen.

First, you could be granted a forbearance where your payments are paused. Then the balance of those payments is due when the forbearance runs out.

If you cannot pay the balance, you need to apply for a forbearance continuance or seek refinancing.

In the second scenario, the forbearance would allow you to miss payments during the forbearance period, then tack those payments onto the end of the mortgage. In essence, extending the life of your mortgage.

It is important to note just because you are not making the payment does not mean you are not paying interest during this time. The interest will continue to accrue during the forbearance time.

Work With Your Lender

As scary as all this is, do not take the “ignore it” approach and hope the problem will disappear. It is important to get in contact with your lender and ahead of the game in seeking assistance.

Remember, they are likely going to be bombarded with calls. Be patient and persistent. Keep calling until you get through.

Have a good handle on your financial situation before calling because they are likely going to want some specifics from you related to your finances.

You will likely need to complete some kind of application. Get a contact person so you know who will be handling your request.

While this situation can certainly lead to high anxiety, know that everyone is feeling it and trying their best to navigate it. It will not make solutions come more quickly by yelling or be difficult with your mortgage lender.

Having said that, do not give up. Contact them regularly so you know where your paperwork stands. Request all information in writing and keep track of your records.

Other Assistance

Other types of assistance vary from state to state and lender to lender. For this reason, you need to get on the phone with your lender.

Ask:

  • Are there options available to you to help reduce or suspend payments?
  • Is the mortgage lender offering forbearance, loan modification or some other kind of relief?
  • Is it possible to get late fees waived?

Many states have issued moratoriums on foreclosure proceedings. This moratorium would prevent mortgage lenders from starting foreclosure proceedings if you fall behind during this time.

Get the Mortgage Assistance You Need

Mortgage assistance is available in many forms if you are struggling because of the COVID-19 crisis. Be proactive in seeking help from your lender. Ask questions about options to help you and keep track of your records.

Contact us today if you need help or have questions about the best way to proceed with your mortgage.

7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with every phase of each mortgage transaction. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.