COVID-19 Relief (CARES Act)

During this time of great uncertainty, one thing is certain: that every individual, household, business, and organization in the United States are feeling the impact of the global Coronavirus Pandemic. As we work together to reduce the spread of infections by staying home and closing non-essential businesses, an unprecedented number of people are facing layoffs, furloughs, unemployment, reduced hours, and/or reduced wages.

In the face of economic hardship, among the first concerns for many homeowners is, “How will I pay my mortgage?” Government at all levels from Federal to State to municipal, are working to help our national economy as a whole, and individual businesses and households survive the financial effects of the health crisis.

Here is some of the most recently released information on how COVID-19 relief can help mortgage holders:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

This Federal law provides financial help in the form of direct payments to taxpayers, supplemental unemployment assistance, and small business loans designed to help more companies continue to pay their employees. All of these funds should help some homeowners stay current on their mortgage payments during this time.

The CARES Act also provides additional relief for those with Federally backed mortgage loans, including FHA loans, VA loans, USDA mortgages, and loans backed by Fannie Mae or Freddie Mac.

A Foreclosure Moratorium has been put into place, meaning that the foreclosure process can not be initiated or more forward if the homeowner has a Federally backed mortgage for at least 60 days from March 18, 2020. The exception to this is if the property has been abandoned or left vacant.

Homeowners with Federally backed home loans who are experiencing financial hardship due to the COVID-19 emergency that could prevent them from making their monthly mortgage payments can request forbearance from their servicer. The borrower can request not to make their mortgage payments for 180 days, and if needed, can request an extension of the second period of 180 days. During this time, no fees, penalties, or additional interest will accrued.

State Specific Relief

Many states also have guidance asking mortgage lenders to take specific actions for those in financial crisis due to COVID-19, such as postpone foreclosures, forbear monthly mortgage payments, waive late fees, or refrain from reporting late payments to credit agencies.

What should you do if you are concerned about paying your mortgage?

The first step is to talk to your lender. There are many more options available before you have any missed or late payments. Depending on the lender and your scenario, you may be able to work out a plan that involves skipping or reducing one or more payments.

It is important to understand that there is no automatic COVID-19 related mortgage reduction or elimination – you must reach out to your lender, ideally before a payment is late.

What should you do if you can afford to pay your mortgage?

If you are currently employed or have savings available, it is important to continue to make your mortgage payments. The relief is to help homeowners in a financial emergency, who could face foreclosure and even homelessness as a result of the current crisis. Getting through this together with a strong housing market and stable lending institutions relies on those who can pay their monthly mortgage payments continuing to do so.

Please note that regulations, guidance, and policies continue to change to address a rapidly evolving situation. We will continue to keep our clients up to date as we learn more. If you have any questions, please reach out to us for assistance. We extend our good wishes .