Congress passed the CARES Act, which now provides several protections for consumers who have a federally insured mortgage loan. These “federally backed mortgages” that are eligible for assistance under the CARES Act include mortgages for single-family homes that are:
- purchased or securitized by Fannie Mae or Freddie Mac;
- insured by the Federal Housing Administration (FHA), including reverse mortgages or Home Equity Conversion Mortgages (HECMs);
- guaranteed, directly provided by, or insured by the Department of Veterans Affairs (VA);
- guaranteed, directly provided by, or insured by the Department of Agriculture (USDA); or
- guaranteed under HUD’s Native American or Native Hawaiian Home Loan Guarantee programs.
Homeowners who do not know whether their mortgage fits this definition, should reach out to their mortgage servicer to find out. Your mortgage servicer is the company that you send your mortgage payments to each month. For context, 70 percent of mortgages in the current market are federally backed. If you are unsure of who owns your loan, here are some steps you can take to find out:
- If you have an FHA, VA, or RHS loan, it will be indicated in your loan closing documents. If you do not have a copy of those, you can call your servicer to ask, or for FHA loans, you can call HUD’s National Servicing Center at 877-622-8525.
- To check if you have a Freddie Mac loan, visit: https://ww3.freddiemac.com/loanlookup/
- To check if you have a Fannie Mae loan, visit: https://www.knowyouroptions.com/loanlookup#
These protections include:
- Any borrower with a federally-backed mortgage due to COVID-19 may request a forbearance, regardless of their delinquency status, by submitting a request to their servicer and affirming that their financial hardship is due to COVID-19. No documentation regarding the hardship needs to be submitted.
- This forbearance period shall continue for up to 180 days, and if the borrower requests an additional extension, they can obtain another 180-day forbearance.
- During the forbearance period, no fees, penalties, or interest shall accrue except for what is already allowed if the borrower were making timely payments.
- No servicer of a federally-backed mortgage may initiate a foreclosure, move for a foreclosure judgment, conduct a foreclosure sale, or proceed with an eviction from March 18, 2020 to May 17, 2020.
Please be aware that a mortgage forbearance is not a forgiveness of debt, and you will have to work out a loan modification or repayment plan with your lender or servicer at the end of the forbearance period to resume making payments, including all missed payments. The CARES Act is silent as to the kinds of loan modifications that will be offered. However, a common type of loan modification following a forbearance period extends the mortgage term for the length of the forbearance to allow the homeowner to resume making payments in an amount that is very similar to what you were paying prior to the forbearance. You can look up a HUD-approved housing counseling agency for help here. Homeowners will have to attest to financial hardship caused directly or indirectly by COVID-19 to receive a forbearance but are not required to provide any further documentation to prove such financial hardship. Note that securing a forbearance should only be sought after serious consideration of the positives and negatives of doing so and it is strongly recommended that you get the advice of counsel experienced in this area of the law to assist you in making this decision.
If you are subject to an initiation of foreclosure proceedings, a continuation of foreclosure proceedings, or a foreclosure related eviction within the 60-day period beginning on March 18, 2020, you should contact your servicer immediately to demand an explanation. You may also contact the relevant federal agency or entity that is backing your mortgage or seek out legal assistance. You may want to submit a complaint with the Consumer Financial Protection Bureau through their complaints webpage, available here. You can also contact the CFPB via telephone by calling (855) 411-2372.