On March 27, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. This $2 trillion aid package will provide financial aid to families and businesses, and also includes provisions for mortgage relief for homeowners and eviction protection for renters.
The CARES Act has a vast array of provisions and aid options that could help many of you. I’ve provided some highlights below as well as some helpful information on what you can do if you are in financial need:
For Homeowners Who Need Mortgage Relief
Homeowners who have suffered a loss of income during the current coronavirus outbreak may be able to qualify for mortgage relief, either through reduced payments or a pause in payments.
Depending on the type of loan you have and who backs your mortgage, your relief options will differ and may or may not fall under the CARES Act provisions.
That is why homeowners must contact their mortgage service provider directly to work out a payment plan with them. Remember, your mortgage servicer is the one who currently receives your payments so check your mortgage statement for contact information.
Below is a rundown of current relief options; you can get more specific details and other helpful information on the Consumer Financial Protection Bureau (CFPB) website.
CARES Act Provisions for Homeowners
If your mortgage is federally backed you have two mortgage relief options (check with your loan servicer if you are not sure):
· Foreclosure Protection – If you fail to make payments on your mortgage, your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this time.
· Forbearance Relief — This allows you to pause or reduce your mortgage payments for a limited period of time. You will have to repay any missed or reduced payments in the future. Under the CARES ACT, you have a right to request forbearance for up to 180 days. You also have the right to request one extension for another up to 180 days (for a total of 360 days).
You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.
If your mortgage is backed by Fannie Mae or Freddie Mac
· Foreclosure Protection – The U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, have directed mortgage servicers to halt all new foreclosure actions and suspend those already in progress.
The HUD order applies to single-family homeowners unable to pay their Federal Housing Administration-backed mortgages.
· Forbearance Relief — You will have the same forbearance relief as described above, plus you won’t incur late fees or have delinquencies reported to credit reporting companies. Foreclosure and other legal proceedings will be suspended.
· Helpful Websites:
Mortgages Not Backed by Federal Government:
If you have a mortgage loan that is not backed by one of the federal agencies or entities:
· Contact Your Servicer – Financial institutions are being encouraged to work with borrowers who can’t make mortgage payments due to COVID-19. See if your servicer can provide options for you at this time.
· State Mortgage Relief Options — Here’s the latest from Governor Northam on what is being offered to Virginia residents for mortgage relief.
Don’t Panic But Protect Yourself
· Understand mortgage servicers are busy now. Loan servicers are experiencing lots of calls and questions right now so be patient if you’re waiting on the phone longer than expected. Have your account number ready to speed things along.
· Get written documentation. Get agreements and terms in writing once you secure a mortgage relief option. Make sure your monthly statements reflect any assistance provided and check for errors.
· Beware of scams. Unfortunately, there will be scams out there that will promote false promises for mortgage relief due to COVID-19 right now. Be wary of any upfront fees, signing over your property title, requiring your credit card numbers, or making any payments to someone other than your service provider.
CARES Act for Renters
In addition to helping homeowners stay in their home, the CARES Act also prohibits rental evictions for 120 days on properties secured with a government-backed loan; and other states and local cities have prohibited evictions. In Virginia, evictions currently have been suspended until at least April 30th.
Other Benefits and Aid Available
My goal today is to provide you with a starting point so that you can seek out the help you may need when it comes to your home and your financial needs.
Keep in mind that the CARES ACT offers other benefits that you may qualify for and receive, so be sure to understand what it offers and what assistance you can get.
If you are being impacted financially, the CARES Act may provide additional relief and aid to you — everything from a direct check if your income qualifies to waiving penalties for withdrawing from your retirement account, increasing 401k borrowing limits, small business grants, and much more.
This Forbes article provides an excellent summary of the CARES Act.
Stay Informed and Reach Out
I hope this information reassures you that there is help available to you if you are currently feeling any financial strain or will in the coming weeks. If you know anyone who is stressed about making their mortgage or rent payments share this information with them. I want to make sure everyone knows about the options available to them during this stressful time.
Stay home and stay healthy. And don’t hesitate to reach out to me with questions or concerns.
I'm Nancy and I love helping homeowners who have outgrown their current home and are ready to buy a new home but don’t know where to start. Let me know how I can help you make your real estate dreams come true.
4040 Fairfax Dr. #10C
Arlington, VA 22203
staged to Sell
schedule your free consultation