Pandemic Mortgage Payment Relief (last updated on 03/18/2020)

Coronavirus - Pandemic Mortgage Payment Relief

Pandemic Mortgage Payment Relief

The coronavirus has officially been declared a pandemic by the World Health Organization. The stock market is hitting lows that haven’t been seen in over 30 years, and many industries are beginning to lay off their workers.

This is for American homeowners who are finding themselves in a financial hardship and cannot make their mortgage payments. Please do not wait and be too late to take action. Your mortgage lender will be more open to helping you the earlier you take action.

Statement from FHFA Director Mark Calabria on Coronavirus

Statement from FHFA Director Mark Calabria on Coronavirus

What is mortgage forbearance?

Forbearance is when your mortgage lender allows you to temporarily pay your mortgage at a lower payment, or pause paying your mortgage. Forbearance can help you deal with hardship, but it does not erase the amount you owe on your mortgage. You will have to repay any missed or reduced payments.

What can I do if I can’t make my mortgage payments?
Each loan is different and has a different type of forbearance help.

VA Forbearance:
If you’re having difficulty making your mortgage payment, contact your loan provider right away. This is a great chance to find a solution that might work for your scenario. If you’re hesitant about contacting your loan provider, you can always reach out to a VA loan technician at 877-827-3702.

Be wary of those who offer to help you make back up payments. It’s best to contact your nearest VA regional loan center for advice to see if you’re getting an honest offer or a scam.

FHA Forbearance:
FHA has a few different programs for forbearance.

  • Home Affordable Unemployment Program (UP): If you are having a tough time making your mortgage payments because you are unemployed, you may be eligible for UP. UP provides a temporary reduction or suspension of mortgage payments for at least twelve months while you seek re-employment.
  • Emergency Homeowners’ Loan Program (EHLP):
  • FHA Special Forbearance: If you are having difficulty making mortgage payments because you are unemployed and have no other sources of income, you may be eligible for FHA’s Special Forbearance. FHA now requires servicers to extend the forbearance period by offering a reduced or suspended mortgage payment for up to twelve months for FHA borrowers who qualify.

Contact your lender
If you are experiencing difficulties making your mortgage payments, you are encouraged to contact your lender or loan servicer directly to inquire about foreclosure prevention options that are available. If you are experiencing difficulty communicating with your mortgage lender or servicer about your need for mortgage relief, there are organizations that can help contact lenders and servicers on your behalf.

Assistance for FHA-Insured Homeowners
The Federal Housing Administration (FHA), which is a part of the U.S. Department of Housing and Urban Development (HUD), is working aggressively to halt and reverse the losses represented by foreclosure. Through its National Servicing Center (NSC), FHA offers a number of various loss mitigation programs and informational resources to assist FHA-insured homeowners and home equity conversion mortgage (HECM) borrowers facing financial hardship or unemployment and whose mortgage is either in default or at risk of default.

Contact FHA
FHA staff are available to help answer your questions and assist you to better understand your options as an FHA borrower under these loss mitigation programs. There are several ways you can contact FHA for more information, including:
Call the National Servicing Center at (877) 622-8525
Call the FHA Outreach Center at (800) CALL FHA (800-225-5342)
Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877-8339

Conventional Forbearance:
It depends if you have a Fannie Mae or Freddie Mac loan. Call your services if you don’t know.

Freddie Mac:
Borrowers impacted by COVID19 meet the forbearance hardship requirements under the eligible hardship listed in Single-Family Seller/Servicer Guide Section 9202.2. Click Here for more info. While we understand that the impact to borrowers may be temporary, it is still a hardship, and servicers must work with impacted borrowers who are unable to make their mortgage payments to ensure they are evaluated for a forbearance plan or other appropriate assistance. We ask that servicers be responsive to potential requests for assistance from borrowers who may be impacted by COVID19.

Please reach out to your Freddie Mac representative if you have additional questions.

Fannie Mae:
A borrower must have one or more of the eligible hardships identified below in order to be eligible for certain relief or workout options.

Fannie Mae Eligible Home Mortgage Hardships

Fannie Mae Eligible Home Mortgage Hardships

The borrower must document the financial hardship by:

  • Situations not considered to be an eligible hardship
  • Depreciation in the value of the mortgaged premises
  • Temporary income interruption, but the borrower has assets (liquid or that can be liquidated) available to pay the mortgage
  • Interest rate adjustment on an ARM or re-amortization of an interest only mortgage upon expiration of the interest only period

Forbearance Form (Fannie Mae, Freddie Mac, FHA and USDA):

Different types of forbearance options:

Forbearance is complicated. There isn’t a “one size fits all” solution because the options depend on many factors including:

  • The type of loan
  • The owner or investor requirements in your mortgage loan
  • Your servicer

There are key things to consider with each type of forbearance. You’ll want to pay close attention to how your servicer expects you to pay back any missed or reduced mortgage payments.
Here are some forbearance examples to guide you

Paused Payments Option-Paid During Existing Mortgage: Your servicer allows you to stop making payments for six months, but you must pay everything back at once when your payments are due again.
What to consider:
You may owe a big bill that comes due all at once. For example, if your servicer allowed you not to pay your mortgage for six months, at the end of the forbearance period, you may owe all six of your missed mortgage payments in one month.
Interest on the paused amounts will continue to accrue until you repay them.

Mortgage Payment Reduction Option: Your servicer allows you to reduce your $1,000 monthly mortgage payment by half for three months. After the three months are over you have one year to pay back the amount of that reduction.
What to consider:
The amount of the reduction would be spread out over 12 months and added to your mortgage payment once the reduction period is over. This means your monthly mortgage will increase during that one-year period. Using the example above, you would pay $500 for three months and starting on the fourth month you would need to pay $1,125.00 ($1,000 + $1,500/12) each month for the next 12 months.
Interest on any reduced amounts will continue to accrue until you repay them.

Paused Payment Option-Paid back at End of Mortgage: Your servicer allows you to pause payments for one year, and that amount is repaid by either adding it to the end of your mortgage loan or by you taking out a separate loan.
What to consider:
You can extend the term of your loan for some amount of time to pay back the paused payments or take out a separate loan. Extending your loan means the missed payments will be added on to the end of your loan. For example, if you were given a twelve month period where you didn’t have to pay your mortgage, you’ll have twelve months of payments added on to the date when your loan was supposed to be paid off by. Extending with a separate loan means when your mortgage is due you’ll also have to pay off this separate loan. This is like a balloon payment, which is one large payment due at the end of your loan. Interest on the missed amounts will continue to accrue until you repay them.

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