Today we are seeing so many of our clients being impacted and the economic implications of sheltering-at-home, furloughs and lay-offs. But help is available for those who need it.
What is Mortgage Forbearance?
If you are having difficulty making your mortgage payment during this difficult time, you may want to consider mortgage forbearance. This is the ability to skip or make reduced payments for a defined period of time, providing temporary relief for those who can’t make payments due to the current financial constraints.
Through forbearance, you are able to defer payments, avoid late fees and the risk of foreclosure. It is important to note, though, that interest does still accrue and your missed payments will still be due at the end of the forbearance period so it’s best to be used judiciously.
Forbearance Under the CARES Act
Because of our current unprecedented times, the federal government has enacted the CARES Act. As part of this act, homeowners who are currently experiencing financial hardships can contact their mortgage servicer to get a mortgage forbearance for up to 180 days. After the initial period, it can then be extended for another 180 days. The CARES Act also provides a moratorium on foreclosures.
This particular option is for loans that are backed by the federal government such as FHA, VA, USDA, Fannie Mae or Freddie Mac loans. However, many other lenders that are not government backed have also instituted their own forbearance programs.
How Does CARES Act Mortgage Forbearance Work?
Under the current CARES Act, you will be entitled to forbearance under the specified terms of the lender and the servicer. Each servicer may have somewhat different options for repayment but you must be offered several options other than a lump-sum payment at the end of the time period.
Your loan servicer will set up an agreement setting out the length of the forbearance period and the options under which the payments will be repaid. Once the forbearance period ends, you will be responsible to repay the servicer according to the terms of your agreement.
Will This Affect Your Credit?
No. Under the current CARES Act, mortgage forbearance will not affect your credit.
How to Apply for Mortgage Forbearance?
The best place to start is with your mortgage servicer’s website. You can call their number but there may be a long wait for your call to be answered. Another resource for answers is to contact a housing counselor at the Department of Housing and Urban Development. You can find a counselor near you by checking the HUD website.
State of California Mortgage Relief
In addition to the CARES Act, Governor Newsom has suspended all evictions and foreclosures until 90 days after the state of emergency has been lifted. This is additional assistance for borrowers who may not have been able to negotiate forbearance through a government-backed mortgage program.
About H.O.M.E. Lending
At H.O.M.E. Lending, they understand that many clients may be dealing with this financial crisis right now. They are here to help and would be glad to answer any questions concerning your current mortgage or taking a look at short or long-term lending options for these crucial times. Call H.O.M.E. Lending professional team of mortgage brokers at (209) 477-0262.