On March 27, 2020, the president signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law. The law includes a foreclosure moratorium and mortgage payment relief for certain loans on single-family properties.
There is a moratorium until Sunday, May 17, 2020 preventing a Bank or Mortgage Servicer from initiating any judicial foreclosure actions on a property secured by a “federally backed mortgage.” Since it falls on a holiday, the earliest foreclosure filings could resume would be Monday, May 18, 2020.
These are mortgages which are guaranteed by a federal agency or federally created entity. The following agencies provided “federally backed mortgages”:
U.S. Department of Housing and Urban Development (HUD)
Federal Housing Administration (FHA) (Includes reverse mortgages)
U.S. Department of Veterans Affairs (VA)
Fannie Mae (Is my loan backed by Fannie Mae ?)
Freddie Mac (Is my loan backed by Freddie Mac ?)
(note: nearly half of the nation’s mortgages are owned or backed by Fannie Mae or Freddie Mac)
Yes, the CARES Act also permits borrowers who are experiencing a financial hardship because of the coronavirus pandemic to request a forbearance on their federally backed mortgages.
Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time. Forbearance doesn’t erase what you owe – you’ll have to repay any missed or reduced payments in the future.
Your repayment options will be influenced by the type of mortgage you have. You should be prepared to discuss forbearance repayment options with your lender or mortgage servicer.
No, you must advise your mortgage servicer or lender that you are requesting a forbearance on your federally backed mortgage because you are experiencing a financial hardship due to the coronavirus pandemic.
Contact your mortgage servicer or lender. This is most likely the entity that sends you any account statement. You may call them, email, or send a letter. We have provided a letter template which you may use with instructions and you can find it here.
If you choose to call, please remember that you may have to wait on the line for a while to speak to your mortgage servicer or lender because there are a lot of people in need right now. Be prepared with relevant information and check their website before you call to see if there is a list provided of information you may need.
(Click here for questions to ask and information to have ready when you call your Servicer. )
You should also keep track of all communication you have with your mortgage servicer or lender. We recommend a note/log book, and if you send a letter request for forbearance, try to send it with a return receipt request from the US Postal Service or a private carrier.
If you are experiencing a financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request one extension for another additional 180 days if needed. You may also end your forbearance period early should you be able to do so.
The CARES Act also provides that no additional fees, penalties or additional interest (beyond scheduled amounts) will be added to your account should you request a forbearance.
Yes, requesting a forbearance is only available during the time period of the COVID-19 national emergence declaration (as of March 13, 2020). This COVID-19 national emergency time period may end in one of two ways: 1. The National Emergency is declared to have ended by the federal government, OR 2. The CARES Act forbearance provision will expire on December 31, 2020.
Any borrower experiencing a financial hardship should reach out for assistance sooner rather than later.
First, if you are granted a forbearance make sure to request written confirmation from your lender or mortgage servicer that you received a forbearance. Next, make sure you know and understand what repayment option you are going to have to meet. Keep records of your communications and your monthly statements. Finally, if you are no longer experiencing a financial hardship make sure you know and understand how to resume your mortgage and what repayment option you have to meet.
If you continue to suffer financial hardship, remember that under the CARES Act you are entitled to request an additional period of forbearance.
There may be some assistance. Borrowers with a mortgage not backed by the federal government should still contact their lender or mortgage servicer as many private lenders are offering some various levels of assistance. Your mortgage servicer should be able to help you identify alternatives that may be available to you given your specific circumstances.
In addition, New York has also offered some mortgage relief options for those programs you can contact your lender or mortgage servicer to request further information.
For an overview of the CARES Act and federally backed mortgage you may wish to watch the Consumer Financial Protection Board Video on Youtube titled: “CARES Act Mortgage Forbearance: What You Need to Know— consumerfinance.gov” of April 2, 2020.