Determining When You Need Mortgage Assistance
Understanding when you need help may be difficult. Lets say you lost your job in 2020. Thanks to government stimulus programs, you were able to keep up with your mortgage payments over the last year. However, some of those programs have ended and youre still unemployed. Your savings are dwindling fast, and finding another job doesnt seem likely in the immediate short term.
Once you realize youll have difficulty making your mortgage payments, act quickly. Generally speaking, banks report late payments once they exceed the 30-day mark, and that can cause a big hit to your credit score.
But even more frightening than damaging your credit is the prospect of losing your house. Since a mortgage is a type of secured debt, your property will be at risk of foreclosure if you fail to keep up with your payments. Although legally, banks arent able to foreclose on your home unless youre at least 120 days delinquent, youll still want to move as quickly as possible to prevent it.
What Is A Mortgage Relief Program
A mortgage relief program is more like aid or protection from lenders by completely suspending payment or reducing the repayable amount for a certain period due to the inability to repay the loans and agreed interests. When you acquire a mortgage relief, you acquire security over your property, and payments are waivered for an agreed period. One form of mortgage relief is forbearance, which is when the lender gives you the grace of pausing or reducing your mortgage payments for some time as you get things back in order.
How To Request Homeowner Assistance Funds
Homeowner assistance funds are in the process of being distributed to states for redistribution to homeowners. The U.S. Department of the Treasury has provided guidance for states to use in developing their individual HAF plans.
You will request funds from your state after your states HAF plan has been approved and its system is up and running. Meanwhile, the National Council of State Housing Agencies Homeowner Assistance Fund webpage features a map showing the status of each states HAF to date.
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Veteran Mortgage Relief Options
One benefit of a VA loan is that the Department of Veterans Affairs can help you out if youre having trouble making mortgage payments.
Veteran mortgage assistance comes in two forms:
If youre underwater on a VA loan and need to refinance, you may be able to use the VA Streamline Refinance to do so. Like other Streamline programs, the IRRRL requires no income or employment check, and skips the home appraisal so your LTV wont matter.
If youre not sure whether a refinance is right for you, you might take advantage of the other VA relief program.
For VA loan holders as well as veterans with non-VA mortgages, the VA offers access to professional counselors who can help you if youre having trouble making your payment. These people help veterans figure out whether they should refinance, try to restructure their loan, or take another measure to prevent foreclosure.
Even better, the VAs loan technicians work with your lender on your behalf so you dont have to figure out all the logistics of a mortgage relief program yourself.
Important Things To Know First
If you can pay your mortgage, pay your mortgage.
If you cant pay mortgage, or can only pay a portion, contact your mortgage servicer immediately.You may need to stay on the phone for a while before the servicer is able to take your call. Loan servicers are also impacted by the pandemic, so may be working with staffing and technology limitations.
Homeownership counseling and assistance is available to Washington residents.Homeowners in distress may call DFIs toll-free number 1-877-RING-DFI to talk to a member of our team and to get assistance in how best to contact their mortgage servicer, and to learn more about their options.
If you would like to talk to a housing counselor, call the Washington Homeownership Hotline at 1.877.894.HOME.
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The Decision To Request Forbearance
If your loan is eligible for relief and you are having financial hardship due to COVID-19, you are entitled to lower payments or forbearance that is provided in the CARES Act. If you are still able to make your full monthly payment, you may wish to keep doing so because interest continues to grow as scheduled and you will eventually have to repay the amount of any forbearance.
When discussing forbearance with your mortgage servicer, be sure to discuss all repayment options available to you before entering a forbearance program. Repayment options may differ depending on your loan type, and you should know before entering forbearance how you will be expected to repay your paused payments.
If you and your servicer disagree on forbearance relief options, please remember that the CARES Act entitles you to a forbearance of up to 180 days at your request, and an extension of an additional 180 days at your request. Keep detailed notes on your conversations and check any documentation sent by your servicer to make sure the terms of your forbearance are clear.
Information On Mortgage Forbearance And How To Pause Your Mortgage Payments
The information here relates to both federally- and state-provided relief, and there are important differences between the two relief programs, so you should contact your servicer to discuss what specific relief options are available to you. New Yorkers can also contact organizations that offer free housing counseling and legal assistance. See the Wondering where you can get help? section.
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How Will Forbearance Impact My Credit
Rocket Mortgage won’t report payments paused during a forbearance as late to the credit bureaus. More complicated is whether and when you can refinance or get a loan for a new home:
- In general, if you’ve continued to make mortgage payments on time throughout your forbearance, you’re eligible.
- For FHA loans, unless you’ve been continuing to make your payment throughout the forbearance, you have to make three consecutive scheduled payments or three payments after selecting a repayment option to do a purchase or rate and term refinance. For cash-out refinances, you need to make payments for a year.
- For VA loans, you can bring yourself current, but if you qualify, you can also refinance to pay off past-due amounts.
- To qualify for a conventional loan option through Fannie Mae or Freddie Mac, you have to either have made up all back payments on the mortgage that was in forbearance or have made three consecutive payments in a workout plan.
To Start Verify Your Mortgage Type
The kind of mortgage you have may determine what types of assistance are available to you.
The GSEs, Fannie Mae and Freddie Mac, deal with conventional loans.
The Federal Housing Administration insures FHA loans.
The Department of Veterans Affairs guarantees VA loans.
The Department of Agriculture offers USDA loans.
To verify whether you have an FHA, VA or USDA loan, find your closing documents and look for the Closing Disclosure. In the upper right of the first page of this document, under “Loan Information,” you’ll see checkboxes indicating your loan type: conventional, FHA, VA or other.
If you can’t locate this document, try looking at your monthly mortgage statement or contacting your lender at the phone number listed on the statement.
Regardless of mortgage type, contact your lender to discuss relief options. The federal government has encouraged all lenders to support homeowners who need mortgage assistance due to hardship brought about by the coronavirus pandemic.
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Helping Businesses Keep Their Workers
To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
Additional Resources On Cares Act Forbearance
If you need help working with your mortgage servicer or understanding your options, you may want to reach out to a non-profit housing or credit counseling agency, or other professional to help you with your specific situation. Contact information for filing a complaint with and requesting assistance from the CFPB or your state regulator is included below.
Mortgage regulators at both the state and federal level have websites with information about what governments are doing to protect consumers during this national emergency. These websites include:
- Unified Agency Website: www.cfpb.gov/housing
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How To Refinance Second Mortgages
Refinancing a second mortgage requires almost the same steps as refinancing the first mortgage. In most cases, youll have to wait at least 12 months from when you were approved for the second mortgage before refinancing it. Most lenders also require you to have at least 20% equity in your home. If you plan to refinance with a different lender, you may want to check with the lender who holds your second mortgage before pursuing refinancing.
It may be slightly more difficult to find a lender, as refinancing second mortgages carries more risk for the lender. If for any reason your house is foreclosed, the second lender only gets whats leftover after the first lender is paid off. Nonetheless, if you have good credit, a stable income, and youve made your mortgage payments on time, you should be able to find a lender willing to help you refinance your second mortgage.
Before considering refinancing any mortgage, you should do your research, speak with your financial advisor, and calculate whether youll benefit financially by refinancing. Depending on the fees, the cost of refinancing a second mortgage may outweigh the benefits.
Once youve decided that refinancing your second mortgage is the right choice, figure out if you would qualify for favorable interest rates by checking your credit score and assessing your financial situation. Your lender may look at your other debts, so determine your debt-to-income ratio.
Mortgage Stimulus For The Middle Class
If you owe less than $600,000 on your mortgage, your chances of qualifying for the mortgage stimulus program are great.
The government wants the banks to reduce your interest rates.
Lower rates means more money in middle-class consumers pockets, ultimately boosting the economy.
Banks, on the other hand, are furious about this program. Heres why:
Banks absolutely hate this program!
They would rather make more money by keeping you at your current higher rate.
The middle class seems to miss out on everything, but these historical rates programs are a huge jackpot for them as it is the best mortgage stimulus for the middle class.
Millions of homeowners could still benefit today, but many perceive the savings.
Remember, theres absolutely NO COST to see if you qualify.
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Hardest Hit Fund Programs
The US Treasury administers the Hardest Hit Fund, which provides aid to the states that were most impacted by the economic crisis. Each of these states have local agencies that help homeowners in various ways, including mortgage payment assistance for the unemployed, principal reduction, and transactional assistance. This helps people either afford the homes theyre in, or move to more affordable housing.
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Communicate With Your Lender
If you know that you are going to have trouble making your mortgage payments, contact your lender immediately and let them know you are having financial difficulties. This allows your lender time to work with you to create a plan. Remember, do not stop paying your bills, and do not wait until you cannot make payments before you act. Learn how to talk to your lender about trouble making payments.
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How To Get Help
If you think you might have trouble making a mortgage payment your first call should be to your mortgage servicer . They may be able to arrange temporary mortgage assistance options, including a mortgage forbearance plan.
No matter what the future brings, Fannie Mae will be here to help, providing you with the reliable information you need about forbearance plans and other kinds of mortgage assistance.
If youre a homeowner who is financially impacted by COVID-19, youre not alone. Our Loan Lookup tool can help you see what free resources are available to you.
What If You Have A Non
Federal regulators believe most non-government-backed lenders and loan servicers will adopt policies similar to those mandated by the CARES Act and subsequent legislation. To find out, contact your loan servicer, ask what programs it has in place to provide mortgage relief to homeowners impacted by the coronavirus outbreak, and follow any instructions you are given.
Although the CARES Act does not require private lenders to offer mortgage assistance, if you and your lender come to any type of loan modification agreement, then the law regarding not reporting reduced or paused payments to does apply to you.
If your mortgage forbearance is set to expire soon, then you may be able to request an extensionbut you must apply before forbearance ends.
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Assistance For Other Types Of Mortgages
Not all mortgages are backed by government agencies or the GSEs. Sometimes called “portfolio loans,” these mortgages aren’t resold and are kept in-house by the lender. Portfolio loans which can include mortgages for self-employed borrowers, borrowers who are not U.S. citizens or borrowers who have experienced a foreclosure don’t meet Freddie Mac and Fannie Mae’s standards. Lenders may also choose to hang onto a mortgage for other reasons.
Portfolio loans aren’t covered by any of the mortgage relief programs listed above. However, your lender may have its own assistance programs. Follow the steps in the next section to contact your lender.
How Homeowner Assistance Funding Works
Treasury is authorized under the American Rescue Plan to provide a HAF award to:
- Tribes or their TDHEs
- Department of Hawaiian Home Lands
HAF programs distribute assistance to eligible homeowners to cover qualified expenses related to mortgages and housing.
Depending on the program, homeowners may use the HAF assistance for expenses such as, mortgage payments , property taxes, homeowners insurance, homeowners association fees, utilities , internet service, and certain home repairs.
Find out more information about how HAF programs work on the interagency housing portal hosted by the Consumer Financial Protection Bureau .
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Why Update This Guide
This update pertains to the period of time in which borrowers have a right to request an initial forbearance or extension of an existing forbearance. Section 4022 of the CARES Act established the requirements for consumers requesting, and mortgage servicers providing, forbearance from monthly mortgage payments on federally backed mortgage loans as described below. However, Congress did not specify the covered period for forbearance, leaving consumers, industry and even regulators uncertain as to when the benefit should expire. This uncertainty led many to interpret that a borrowers right to request forbearance automatically expired Dec. 31, 2020.
New guidance by federal housing agencies clarifies the expiration dates for which borrowers can request initial forbearance to at least Feb. 28, 2021.
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Financial Help For Homeowners And Landlords
Forbearance is not the same as forgiveness. Forbearance only puts off the inevitable day when paused payments must be made up. Programs funded by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021 provide financial assistance to homeowners and landlords under two programs: the Homeowner Assistance Fund and the Emergency Rental Assistance program.
Important Deadlines For Mortgage Relief
Since March 2020, homeowners have had certain protections under the CARES Act.
These measures apply to conforming loans as well as FHA, VA, and USDA-backed loans.
- Foreclosure moratorium: Mortgage companies cannot start foreclosure proceedings against homeowners who are unable to make home loan payments until at least
- Mortgage payment relief: Homeowners may opt into a forbearance plan, pausing mortgage loan payments for up to 12 months if they are experiencing financial hardship
As of , borrowers with Freddie Mac or Fannie Mae loans can request an additional 3 months of mortgage forbearance, for up to 15 months total. To be eligible, you must be in a current CARES Act forbearance plan as of February 28, 2021.
Some homeowners with federally-backed loans can also make an initial request for loan forbearance up to February 28, 2021.
However, this may vary by loan type FHA, VA, or USDA and by loan servicer. So check with yours to see how much time you have to submit a forbearance request.
Read on to learn more about how loan forbearance works and how to request mortgage relief if youre experiencing financial hardship.
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