How Can The CARES Act Help You Pay Your Mortgage During COVID-19 Crisis

Is your ability to pay your mortgage being affected by COVID-19? The CARES Act may be the answer to your problem.

What is the CARES Act?

Recently enacted legislation, known as the CARES Act directs lenders holding federally backed mortgages to suspend borrowers’ payments for up to 12 months if they have lost income because of the coronavirus outbreak. The law also suspends foreclosure and foreclosure-related eviction action and changes the rules regarding credit reporting during some or all of the coronavirus emergency period.1

Key Takeaways

  • If your mortgage is backed by the federal government, provisions of the recently enacted CARES Act allow you to suspend payments for up to 12 months.
  • In addition you will not be charged late fees or reported to credit bureaus.
  • Foreclosures and evictions will be suspended for at least 60 days.
  • If your loan is not federally backed, contact your loan servicer or state or local government offices to find out what options you have.
  • Additional help may be available after the forbearance period.

Mortgages Affected

The law regarding forbearance and foreclosure pertains to mortgage loans backed by the federal government which are defined as loans:

  • Insured by the Federal Housing Administration (FHA)
  • Insured under section 255 of the National Housing Act
  • Guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992
  • Guaranteed or insured by the Department of Veterans Affairs
  • Guaranteed, insured, or made by the Department of Agriculture
  • Purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association1

Paused Payments (Forbearance)

Forbearance, which this is, is not the same as forgiveness. You will still owe the amount you didn’t have to pay, plus interest, during the forbearance period.

The CARES Act directs that if you are experiencing financial hardship due to COVID-19, you will be granted forbearance on your federally backed mortgage loan for up to 180 days with the option to extend for another 180 days.

If you are a landlord with a mortgage on multifamily (5 or more units) housing you have similar protection that allows a 30-day forbearance on payments and up to two 30-day extensions.

How to Request Forbearance

As a borrower with a federally-backed mortgage loan, you will be granted forbearance of up to 180 days by submitting a request to your servicer (the company you make payments to) and affirming that you are experiencing financial hardship during the COVID-19 emergency. No further documentation or proof is required.

Landlords (5 or more units) must have been current on payments as of Feb. 1, 2020. If so, they must submit an oral or written request to their servicer who will approve a 30-day forbearance and, upon request from the borrower, issue up to two additional 30-day forbearance periods.

Right to Halt Forbearance

As a borrower, the CARES Act gives you the right to halt forbearance at any time. This rule applies to you if you have a government-backed loan on a regular (1-4 unit) property or a multifamily (5 or more unit) building.

No Extra Penalties, Interest, or Late Fees

During any forbearance period granted to you, your servicer cannot charge any penalties, interest, or fees that would not have been charged if you made your payments on time and in full. Landlords may not charge tenants any fees or penalties for late payment of rent during any forbearance period granted to the landlord.

No Reporting to Credit Bureaus

Lenders are directed not to report you to credit bureaus for late or missed payments provided you are in one of the forbearance programs. This applies through July 25, 2020 or 120 days after the end of the emergency period, whichever is later. This means the fact you are not making full payments or not paying at all, will not affect your credit rating.

No Foreclosures or Evictions

The law further provides that your lender or loan servicer cannot initiate foreclosure or foreclosure-related eviction action before May 17, 2020. Landlords cannot evict renters during any period in which they are granted forbearance.

Additional Help Possible

Once you reach the end of your forbearance period, you may qualify for additional assistance if you need it. Work with your servicer and, if possible, resume making your regular payments. If you still need assistance ask your servicer what other options are available. This could including reducing your monthly payments or some other type of loan modification. In the event you and your lender reach agreement on any loan modification, you cannot be reported to credit bureaus as “not current” on that loan.  For more assistance contact CIS Home Loans at lossmit@cishomeloans.com

How to Find Out If Your Loan Is Federally Backed

To find out whether your loan is backed by the federal government, making you eligible for the help noted above, here are some actions you can take:

  • Call or write your mortgage servicer. Your servicer is required to tell you who owns your mortgage and provide you with the name, address, and phone number of whoever owns your mortgage.
  • Check online. Use loan lookup tools provided by Fannie Mae or Freddie Mac to find out if either of those two government-backed providers own your mortgage.
  • Check the Mortgage Electronic Registration Systems (MERS) website to find your servicer if you don’t know who that is.2

CFPB. “How can I tell who owns my mortgage?” Accessed Mar. 28, 2020.

If you have further questions about how the CARES Act may affect your ability to pay your mortgage, give CIS Home Loans a call today at 844-809-2462 or email us at lossmit@cishomeloans.com.