If you are a homeowner facing the prospects of not being able to pay your mortgage, it is important to act before your payments become delinquent or you begin racking up credit card debt. The coronavirus pandemic might have affected your ability to pay your mortgage. You might have less work. You might be quarantined and unable to work. You might have lost a job or are working fewer hours.
At Sweetser Law Office, we want to help our community access the resources available to them during times of crisis to protect what matters. Our homes are places of refuge and sanctuary for our families, and the fear of losing a home during the coronavirus pandemic is frightening.
While Sweetser Law Office does not assist with mortgage or foreclosure issues, below are some resources for concerned homeowners:
Document Early and Often!
If you lost a job or otherwise lost income because of the pandemic, make sure you keep documentation of the events so you can qualify with any future relief programs. Homeowners impacted by COVID-19 should contact their mortgage servicer as soon as they realize they are unable to make mortgage payments:
- Borrowers should check the servicer’s website to determine if there is an online portal, email option, or a mobile app to contact the servicer, to avoid long wait times by phone.
- If the mortgage servicer allows a borrower to temporarily pause making mortgage payments, also referred to as a “forbearance,” these payments are not forgiven. Borrowers will eventually be required to repay all missed payments.
- Before accepting a forbearance on payments, borrowers should ask their servicer how and when the payments will be required to be repaid.
- Borrowers should ask their servicer whether late fees will be waived.
- Before the forbearance period expires, servicers should be contacting borrowers to inform them of the available options to bring their loans current. There is no guarantee that all borrowers will qualify for a home retention option, such as a repayment plan or a loan modification, at the end of the forbearance period.
Suspension of Foreclosures During Coronavirus
On March 27, 2020, the President signed into law the CARES Act, which provides foreclosure and eviction moratorium, and temporary mortgage payment relief for borrowers with a “federally-backed mortgage loan.” Federally-backed mortgage loans are defined as loans secured by a first or subordinate lien on residential real property, including condominium units and cooperatives, designed principally for the occupancy of from 1 to 4 families, in the following categories:
- Single-family FHA-insured loans, including Home Equity Conversion Mortgages (HECMs)
- Indian Home and Native Hawaiian Guaranteed Loans
- USDA Guaranteed or Insured Loans
- USDA Direct Loans
- VA Loans
- Loans purchased or securitized by Fannie Mae and Freddie Mac
Fannie Mae, Freddie Mac, the VA, Department of Agriculture (Rural Housing services) and HUD have all suspended (paused) residential foreclosures until at least May 17, 2020. This suspension applies to foreclosures currently in process. This does not mean they have suspended the requirement to make payments.
During the 60 days beginning on March 18, 2020, a servicer of a Federally-backed mortgage loan may NOT:
- Initiate any judicial or non-judicial foreclosure process.
- Move for a foreclosure judgment or order of sale.
- Execute a foreclosure-related eviction or foreclosure sale.
For more information and template letters for notifying a service provider, see: https://nationalfairhousing.org/wp-content/uploads/2020/04/Summary-of-Relief-for-Certain-Mortgage-Borrowers_Updated-4.3.20.pdf
The suspension of Fannie Mae, Freddie Mac, VA, Rural Housing, and HUD residential foreclosures applies to about 70% of mortgages. These programs will not automatically suspend a foreclosure on your home! You still have to contact them to ask for help. You can contact your home loan servicer provider to find out if this applies to your mortgage.
Contacting Your Home Loan Servicer
You can contact your home loan servicer (the company listed on your monthly statement), and ask them to help you with forbearance. Let them know you are going to miss a payment. Ask about a forbearance plan, or ask about any borrower relief available to those affected by the pandemic.
Forbearance lowers your monthly mortgage payment or suspends it (stops it temporarily), during the forbearance period. It can stop late fees and prevent reporting to credit bureaus. When the forbearance plan is completed, a borrower can then work with their servicer to get a permanent plan in place to maintain or reduce their monthly payments or modify their loan. Forbearance usually requires the submission of a complete Request for Mortgage Assistance Application (RMA). Your servicer can tell you what you must do to apply. Some banks and companies can also offer deferments, fee waivers, or hardship assistance.
Borrowers with a Federally-backed mortgage loan experiencing financial hardship due, directly or indirectly, to the COVID-19 emergency may request a forbearance on their mortgage payments during the period beginning March 27, 2020, through the end of the COVID-19 National Emergency or December 31, 2020, whichever is earlier. Borrowers with Federally-backed mortgage loans may request the forbearance by submitting a request to their mortgage servicer affirming they are experiencing financial hardship during the COVID-19 emergency, and:
- Servicers may not require documentation of the hardship.
- Delinquent borrowers may request this forbearance.
- The initial forbearance period can be up to 180 days and could be extended at the borrower’s request for up to an additional 180 days.
- The initial or extended forbearance period may be shortened at the borrower’s request.
- No fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full, shall accrue on the borrower’s account.
For borrowers current on their mortgage at the time a COVID-19 related forbearance is offered, their credit should not be negatively affected under the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 (2020). Section 4021 of the CARES Act - Credit Protection During COVID-19 - amends the Fair Credit Reporting Act. This protection applies to all consumer debt, other than charged-off loans; i.e., is not limited to borrowers with “Federally-backed mortgage loans.” See CARES Act on page 209. This credit protection is effective during the period beginning January 21, 2020, and ends on the later of 120 days after March 27, 2020, or 120 days after the date on which the COVID-19 National Emergency terminates.
Washington State Foreclosure Prevention Counseling
Washington State provides foreclosure prevention counseling free to every Washington State homeowner through the Washington Homeownership Resource Center at www.homeownershipwa.org or at 877-894-4663.