— Part 25of a series. Covers the changes available to those homeowners with federally-backed loans.
The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers relief for those homeowners with federally-backed mortgages.
Please note: before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman. My goal is to share my best understanding and to be of service. I hope you find this helpful.
On March 27th, the CARES Act was signed. This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds. Most of the “goodies” we are interested in are in this act.
This article covers aid for homeowners whose loans are backed by the federal government.
Honestly, the Consumer Financial Protection Bureau does a nice job in this article, so you may just want to jump over there, but I will give a quick summary and some caveats here.
—–I CAN MAKE PAYMENTS —–
If you are still able to pay your mortgage you should do so.
—–I CAN'T MAKE MY PAYMENT—–
If you are not able to pay your mortgage, you should reach out to the servicer (check the statement you get each month for contact information). I would suggest calling in, and while you are on hold also writing a letter to them. If you get through, mail the letter with a written recap of what you were told. If you can't get through, notify them of your situation in the letter, but then keep trying. You will need to agree to a deal with them, not just stop making payments.
When you speak with them, you want to request a payment deferral – that the payments missed go on the back of the loan. If you just do a regular forbearance, they may expect you to make one giant lump some payment down the road (say six months from now). Even if you are back at a regular job, not many people will have that kind of cash on hand. So don't create a problem for yourself in the future if you can avoid it.
These programs are for mortgages backed by the federal government. Ask the servicer for that information.
If your loan is not federally-backed, many states and municipalities have programs in place to stop foreclosure and provide payment relief. Also, the bank or credit union may have programs in place. If you go to your financial institution's website, you should be able to find more details.
Keep in mind if you skip payments that will change the amount in escrow for taxes and insurance (if applicable), so expect a big “escrow catch up” bill down the road. Any cash that comes in that is not needed for meeting basic needs can go into a fund to go toward this and other emergencies/surprises.
—–I WAS ALREADY BEHIND—–
If you were behind on payments already, foreclosures have been halted for 60 days from March 18th.
For many of us, shame prevents us from reaching out when we know we can't make payments. However, if you can move through that emotion and reach out to your servicer, you will get a better result than if you just ignore the problem.
This pandemic is not your fault. You are doing the best you can. Hang in there.
Journal questions:
Is there anything I could do to decrease expenses or increase income right now?
Recent Comments