Have you been impacted by COVID-19? In this article, we will explore foreclosure and mortgage relief options during the pandemic.
As of February 1, 2021 many homeowners have been granted additional time to avoid foreclosure and seek forbearance because the deadlines were extended.
The protections are available to homeowners with mortgages that have been backed by federal government agencies or government sponsored agencies like Freddie Mac or Fannie Mae.
A vast majority of homeowners now have the luxury of having time to seek forbearance so they can avoid foreclosure because the deadlines have been extended.
Forbearance occurs when a mortgage lender or servicer lets the homeowner pause or lower their mortgage payments until they gain a financial foothold and can then resume their normal payments.
The deadline for the initial forbearance of up to 180 days depends on your mortgage lender.
The new deadlines are:
- FHA – Deadline Mar. 31, 2021
- VA – Deadline Feb. 28, 2021
- USDA – Deadline Mar. 31, 2021
- Fannie Mae – No deadline at this time
- Freddie Mac – No deadline at this time
Please remember, your right to extend your forbearance for up to 180 days is not automatic. You must request the forbearance from your mortgage servicer.
Understanding Forbearance Under the CARES Act
With the CARES Acts, homeowners had the right to defer all of their mortgage payments for a certain amount of time. With forbearance, your house payments are not erased or forgiven.
You must repay all of the missed or reduced payments. Typically, they can be repaid over a certain time frame.
When the forbearance ends, your lender will contact you to discuss how to repay the missed payments. Please make sure that you understand exactly how you must repay because each one has their own program and options.
If you have a Fannie Mae, FHA, USDA, VA, or Freddie Mac then you will not need to pay back the full amount unless you can financially handle it. If your income becomes restored before the end of the forbearance then you need to reach out to the lender to resume your payments.
Understanding Foreclosure Moratoriums
A foreclosure occurs when the homeowner fails to make the required payments on the home loan and the lender is forced to take back the property.
The process of foreclosure differs from state to state.
Under federal law, most lenders cannot start the foreclosure process until the loan payments are more than 120 days past due.
However, there are exceptions to this rule if you have a forbearance or loss mitigation program.
A foreclosure moratorium suspends or halts a foreclosure.
With the pandemic relief, any loans backed by FHA or USDA cannot be foreclosed on until after March 31, 2021. Loans backed by the VA, Freddie Mac, or Fannie May cannot be foreclosed on until after February 28, 2021.
The CARES Act prohibits lenders from starting a judicial or nonjudicial foreclosure or from finalizing a foreclosure judgement or property/home sale.
The protection was put in place March 18, 2020. In addition, some states and local governments have also temporarily stopped foreclosures from other lenders for different forms of home loans.
It is important to know your options if you have been impacted by COVID-19.
Contact Oberhauser Law to learn more about forbearance and foreclosure during the pandemic.