Information for Homeowners
On March 27, I voted for the Coronavirus Aid, Relief, and Economic Security (CARES) Act to strengthen our public health response as well as our economic security in light of the COVID-19 pandemic. The CARES Act provided substantial resources to help homeowners during this trying time. Below is an FAQ about mortgage forbearance under the CARES Act.
What relief is available for mortgage holders?
The CARES Act provided homeowners with federally backed mortgages the right to request a forbearance of up to 180 days, with an optional one-time extension for an additional 180 days. A forbearance is an agreement between a lender or borrower to suspend payments for a specified period of time. During the period of the forbearance, you will not be required to pay interest or additional penalties or fees.
Please note your lender will not offer you forbearance automatically; instead you must contact your lender to request the forbearance.
How do I know if my mortgage is federally backed?
Federally backed mortgages include those owned or guaranteed by federal entities such as Fannie Mae, Freddie Mac, the VA, or the Federal Housing Administration (FHA), among others. If you don’t know whether your mortgage is federally backed, the Consumer Financial Protection Bureau has a webpage with suggestions for how you can find out.
How do I repay the missed payments from the forbearance period?
The repayment options available to you will depend on your mortgage lender. Federal regulations for certain types of mortgages, such as those backed by Fannie Mae or Freddie Mac, require lenders to evaluate a borrowers’ ability to pay when offering repayment options. Borrowers experiencing economic hardship may be eligible for a loan modification. Another common repayment option you may be eligible for is extending the length of the mortgage and adding the missed payments onto the end.
You should discuss with your lender to determine which repayment options you are eligible for and which one is best for you. More information can be found here.
What if my mortgage is not federally backed?
You may still be able to get a forbearance on your loan, but it will depend on your lender. Some banks have announced that they will provide forbearance options to borrowers with privately backed mortgages who are experiencing economic hardship. If you are interested in requesting a forbearance, you should discuss with your lender. Please note that your lender may require you to pay all the missed payments in a lump sum at the end of the forbearance period, so it is important to evaluate what option is best for you.
Do I have to provide proof of negative health or economic impacts from COVID-19 to request a forbearance?
If you are requesting forbearance on a federally backed mortgage, no. You will not be required to provide documentation of hardship to request a forbearance. However, your lender may provide more favorable repayment options if you do have proof of hardship you can point to.
If you have a privately backed mortgage, your lender may require documentation of hardship in order to grant you a forbearance.
Will my credit score be hurt if I request a forbearance?
No. The CARES Act prohibited mortgage lenders from reporting missed payments due to the coronavirus pandemic to credit reporting agencies.
Am I protected from foreclosure during this period?
The CARES Act prohibits any servicer of a federally backed mortgage from initiating foreclosure proceedings, or executing a foreclosure related eviction or sale, until May 17.
What steps should I take to avoid fraud or scams?
Unfortunately, there have been reports of people trying to take advantage of these difficult times. Please be skeptical of any unsolicited email, phone call, or text message offering to help you refinance your mortgage. The Federal Housing Administration (FHA) has a factsheet with tips to avoid mortgage scams.
Where can I find more information?
The Consumer Financial Protection Bureau has a webpage with resources about mortgage forbearance. Additionally, the FHA has a Coronavirus Assistance Information Webpage.
Finally, the House Committee on Financial Services has an online FAQ with more information about housing and other financial provisions in the CARES Act.