Mortgage Relief During Coronavirus
Find mortgage relief, even if your loan isn’t backed by the government
The COVID-19 pandemic has left millions of Americans unemployed, and many more have seen lost wages and reduced working hours due to various shelter-in-place orders across the country.
The financial losses have many households worried about how they'll pay the bills and, for homeowners in particular, their mortgages—for most the largest bill of the month.
Fortunately, the federal government has stepped in to offer help. Under the Coronavirus Aid, Relief, and Security Act (the CARES Act), homeowners with federally-backed home loans can request forbearance if the COVID-19 pandemic has caused financial hardship. Forbearance allows these borrowers to pause monthly payments for an extended period of time while they get back on their feet.
- Up to 360 days of forbearance
- No fees or additional interest charged, beyond the regularly scheduled interest and fees
- No documentation of hardship required
- No foreclosures or foreclosure-related evictions until at least mid-May
- Deferred payments cannot be reported to credit bureaus as delinquent
What Loans Qualify for Forbearance Under the CARES Act?
Any federally-backed mortgage loan can qualify for forbearance under the CARES Act. This includes:
- Loans owned by Fannie Mae or Freddie Mac
- FHA loans, including Home Equity Conversion Mortgages (reverse mortgages)
- VA loans
- USDA loans
- Native Hawaiian Housing loans
- HUD-guaranteed Indian Home loans
How to Request Forbearance
Any borrower who has experienced financial distress due to the COVID-19 outbreak—either directly or indirectly—can request forbearance under the CARES Act. If you’re interested in a forbearance plan, you’ll need to submit a request to your loan’s servicer. You won’t have to submit any kind of proof that you’re experiencing financial hardship, but you will be asked details about your financial situation. You should have your account number and other details on hand when you call.
Don’t know who your servicer is? It’s the company you actually send your payments to. Just check your monthly mortgage statement for their contact info. If you’re still not sure who to get in touch with, contact a HUD approved housing counselor for help.
With some lenders, you can request your payment forbearance online (Bank of America offers this, for example). Other servicers may require you to call to request the relief. If you do call, be prepared for long wait times. According to the Mortgage Bankers Association, servicer call volume remains heavy, with customers experiencing extended holds and longer call times.
What Happens to Paused Payments?
There’s no set rule for how servicers must handle your paused payments, so be sure to ask before setting up a forbearance plan. Some may require a lump-sum payment once your forbearance period ends, while others will allow you to tack the missed payments onto the end of your loan term (essentially extending your loan for however many months you are in forbearance.)
With loans that are backed by Fannie Mae or Freddie Mac, homeowners won’t be required to repay the full missed amount “unless they are able to do so,” according to the Federal Housing Finance Agency. Servicers of these loans will contact borrowers 30 days before their forbearance plan ends to arrange a repayment plan, loan extension, or loan modification.
Make sure you’re absolutely clear on what your forbearance plan requires in regard to repayment. You’ll need to budget well ahead of time to ensure you can meet your obligations.
Does Forbearance Affect Your Credit Score?
Under the credit protection portion of the CARES Act, forbearance cannot affect your credit score unless you were already behind on your mortgage. The act calls for servicers to report your payments as “current” for as long as you are on an approved forbearance plan.
In the event you were already late on your mortgage payments, the servicer can continue to report your overdue status to credit bureaus for the entirety of your forbearance period or until you bring your account current.
What to Do If You Don’t Have a Federally Backed Loan
If you don’t have a federally-backed loan, you may still have options. The CFPB and other agencies are encouraging lenders to provide relief.
You’ll need to contact your servicer to find out exactly what these are, but many offer several relief options you can choose from, including forbearance. In addition to forbearance, some other mortgage relief options you may be eligible for include:
- Refinancing, which could help you lower your monthly payments
- A loan modification, to change the terms of your mortgage
- A short-sale, which allows you to sell your home for less than your loan balance
Some states are also offering mortgage relief, so this may be an option, too, if your loan isn’t federally-backed.
If you are approved for some sort of mortgage relief program, ask your servicer to confirm this in writing. You should also pay close attention to your credit report and monthly mortgage statements to be sure your score isn’t changing and that you’re not being charged late fees or penalties.
Once you get back on your feet financially, get in touch with your servicer to end your relief program and get back on track with your payments.
Congress.gov. "H.R. 748." Accessed April 17, 2020.
U.S. House Committee on Financial Services. "Committee Releases Answers to Frequently Asked Questions About the CARES Act." Accessed April 17, 2020.
Bank of America. "Client Information." Accessed April 17, 2020.
MBA.org. "MBA Survey: Share of Mortgage Loans in Forbearance Continues to Climb." Accessed April 17, 2020.
Consumer Financial Protection Bureau. "Guide to Coronavirus Mortgage Relief Options." Accessed April 17, 2020.
Federal Housing Finance Agency. "Frequently Asked Questions: Fannie Mae and Freddie Mac Assistance Options for Families Impacted by COVID-19." Accessed April 17, 2020.
Congress.gov. "H.R. 748." Accessed April 17, 2020.