1 Step to Mortgage Relief – Portland Homeowners vs. COVID 19
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on Friday, March 27, 2020. It extended unemployment benefits for all Americans, proposed “recovery rebates” for taxpayers, and provided a payroll tax credit for all small businesses. The CARES Act also put into place two key protections for homeowners with federally backed mortgages: First, no foreclosures will be allowed until May 17th, 2020. Second, mortgage holders may request up to one year of forbearance on their loan, meaning they can stop making payments temporarily if they have been impacted by the coronavirus or COVID19.
Here in Portland, many homeowners will be relieved to know that losing their income due to coronavirus doesn’t mean they have to sell their home, at least not right away. Although it’s still possible to buy or sell a home and practice good social distancing, those who didn’t plan to sell their home in 2020 shouldn’t have to do so.
In Portland, the foreclosure rate has been down for the last few years (so low they almost didn’t exist!), and with the ban, it will likely stay down for a while. Mortgage relief will also prevent foreclosures from happening, but homeowners should read the fine print carefully before agreeing to deferred payments.
Deferring Mortgage Payments – What you need to know
If you hold a federally backed mortgage (keep reading to find out if your loan is), the CARES act allows you to defer payments for an initial 180-day period. You may request an extension for another 180-day period after that. The law also prevents mortgage servicers from charging additional fees, penalties or additional interest (beyond scheduled amounts) when payments are deferred.
Private banks and mortgage lenders (Wells Fargo, Chase, Guild, etc.) are making some adjustments for their customers without federally backed mortgages, such as waiving late payment fees, but most are stopping short of saying that they’ll defer payments at this time. However, federal financial regulators are encouraging lenders to work with their borrowers, and the sooner that impacted borrowers contact their lender to let them know they can’t make payments, the better.
With both federally backed and private mortgages, one risk is that the deferred payments will all be due at once when the deferment period ends. Be sure you understand when and how missed payments need to be made up with your lender. Some lenders are allowing the missed payments to be added at the end of the loan, but others will expect a balloon payment as soon as regular payments resume.
Finally, when you and your lender come up with a payment plan that works for you, be sure to get it in writing. Ask your loan servicer to provide written documentation that confirms the details of your agreement so that both parties are clear on what the terms are.
Find out if your loan is federally backed.
Private banks and mortgage companies “service” home loans, so it may be unclear whether your loan is actually federally backed and covered under CARES.
TAKE ACTION HERE! STEP ONE:
Federally backed loans are owned by either Freddie Mac or Fannie Mae. Both websites have a simple search tool that can tell you if that institution owns your loan. It just requires your name, address and the last four of your SSN. If you click either of the links in this paragraph it will take you straight to both of their look up tools. It will only take you a couple of minutes to find out if your mortgage is currently federally backed, so you can know if you’re automatically protected or not. Once you know, the next step is to contact your lender and claim that provided protection.
For more information on mortgage relief, visit the Consumer Financial Protection Bureau.April 10, 2020