Your housing is one of your biggest monthly expenses. And if you have a mortgage stretching out ahead of you for the next 10, 15 or 30 years, the uncertainties of the coronavirus pandemic probably have you concerned about how you’ll keep paying that bill.
While the CARES Act, passed in late March to provide coronavirus relief, offers options for some mortgages, it’s not a one-size-fits-all solution for homeowners.
Let’s look at the options for your mortgage, then go over the steps you should take based on your circumstances.
Options for federally backed mortgages
The coronavirus relief legislation puts two protections in place for homeowners with federally backed mortgages:
Foreclosures are paused for 60 days as of March 18, 2020. A foreclosure cannot be started or finalized during this time, and you cannot be evicted from a Federal Housing Administration-insured home during this period.
Homeowners experiencing financial hardship due to the pandemic can have their mortgage put into forbearance, which pauses your payment schedule for up to 180 days. You can ask for an additional 180-day extension when the initial one expires. You have to ask your loan servicer for forbearance, and they can’t put any fees or interest on your loan beyond what would normally accrue during your forbearance.
If you pay your mortgage any of these places, your mortgage is federally backed:
Fannie Mae
Freddie Mac
U.S. Department of Housing and Urban Development (HUD)
U.S. Department of Agriculture
Federal Housing Administration
U.S. Department of Veterans Affairs
If you’re not sure who owns your mortgage, you may be able to find out via the Consumer Financial Protection Bureau.
Options for other mortgages
If your loan isn’t backed by a federal agency, you’re subject to the whims of your lender. Luckily, many financial institutions have advertised that they are making accommodations for customers impacted by the pandemic on a case-by-case basis.
“You will have to pay the amount that was suspended or reduced at a later date with either a higher monthly payment or a lump sum,” explained Beatrice de Jong, consumer trends expert at Opendoor. “There are different plans depending on your bank and where you live, so it’s important to call your service provider to see what’s available for you.”
See below for the questions you’ll want to ask your lender.
Call early and be patient
Some lenders have launched online forms where you can request payment accommodations due to the coronavirus. If yours has not, you’ll have to call.
“The earlier you contact your mortgage lender, the better, so you have more time to explore your options,” says Diane Hughes, senior vice president and director of mortgage at UMB Bank. “You should be prepared to explain your employment situation, how much you can afford to pay and when you’ll be able to restart regular payments.”
The CFPB recommends being ready with your mortgage account number and other financial details when you call:
You may need to explain
Why you’re unable to make your payment
Whether the problem is temporary or permanent
Details about your income, expenses and other assets, like cash in the bank
Whether you’re a servicemember with permanent change of station (PCS) orders
Questions to ask
What options are available to help you temporarily reduce or suspend my payments?
Are there forbearance, loan modification, or other options?
Can you waive late fees?
A few factors are colliding right now to make your wait time longer when you call your loan servicer. First, there’s the nationwide scope of the pandemic, which means customer service teams—which may be adapting to working from home—are dealing with a greater volume of inquiries. Aside from the federal accommodations, various states and cities have also enacted their own rules to aid homeowners during the coronavirus, making every situation more complex.
And remember a few weeks ago when interest rates dropped and everyone wanted to refinance their mortgage at once? Lenders are still dealing with those accounts and the continued interest in refinancing opportunities. de Jong says.
“Since it can take a long time to get a loan servicer on the phone, you will want to reach out to your mortgage servicer immediately—as soon as you think you won’t be able to pay your mortgage or can only pay a portion of it,” Hughes says.
Get clear on the details
Once you reach an agreement with your loan servicer, be sure to ask for it in writing in case there are any errors on your account in the coming months. You’ll want to scrutinize your monthly account statement to make sure it’s accurate, and keep an eye out for any correspondence from your lender that might indicate adjustments or policy changes.
Once you’re back on your feet, the CFPB recommends calling your servicer again and resuming your payments as soon as possible. Even if you’re able to remain in forbearance for a few months, resuming payments reduces the amount of money you’ll pay on your mortgage later, as interest still accrues while your mortgage is in forbearance.