In the current economic environment and the loss of jobs brought on by the COVID-19 pandemic, many Americans are worried about how they will pay their mortgage loans. Last week the US department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency issued a 60-day moratorium on evictions and foreclosures for homeowners with FHA-backed loans. Currently, the mortgage companies of Fannie Mae and Freddie Mac (both regulated by HUD) are ordering loan servicers to offer flexible payment options for up to 12 months for those facing hardship related to COVID-19. Loans owned by Fannie Mae and Freddie Mac account for about half of the home loans in the nation. Provisions are also in place to help protect credit ratings for borrowers taking advantage of the program.

Current information suggests that other mortgage loan companies and lenders will follow suit. Many large lending institutions have information already posted on their websites. Local lenders may have options for borrowers, too. The most important step for all borrowers is to call the lender first. People should not simply stop making payments. The lender needs to advise the borrower about qualifications and how to proceed.

It is also important for borrowers to be aware of the details of a forbearance if one is offered. A forbearance may postpone payments to a later date, but it is possible that the entire lump sum of missed payments will be required at said later date. Borrowers should ask questions to clarify this issue and see if another loan modification is available that does not require a lump sum at the end of the forbearance period. Spreading out missed payments over time or extending the length of the loan would offer more financial protection.

This federally directed plan is good information for borrowers with an FHA loan or for borrowers whose institution is willing to work with them following a similar program. However, it does not guarantee protection for all mortgage loan holders and does not address the situation of renters throughout the nation. At press time, there is no federal program to allow delayed rent payments or put a moratorium on evictions for renters, though some local and state governments across the country have stepped in with temporary assistance. This will be something to watch for as Congress is still working on additional legislation to aid Americans in need.

Resources:

https://www.knowyouroptions.com/covid19assistance: Find out if Fannie Mae owns your loan and how to proceed if it does. Should you need help with a Fannie Mae loan, you will have access to a HUD-approved housing counselor.

https://myhome.freddiemac.com/own/getting-help-disaster.html:Find out if Freddie Mac owns your loan. Should you need help for your Freddie Mac owned loan, call your lending servicer.

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