Many homeowners are facing financial difficulties due to the looming pandemic and a possible recession ahead. At the event of such hardships, many tend to seek refuge from banks and other lending institutions with the hope of taking advantage of forbearance as a possible remedy.
Now that the pandemic is predicted to last for a while longer by the World Health Organization (WHO), both mortgage lenders and their respective regulating agencies are updating their coronavirus mortgage relief policies to help cushion the most affected homeowners.
To help you cope with the situation, here are key resources to keep in mind:
Your mortgage loan lender and available relief options
Those with federally backed mortgages are entitled to a six-month forbearance option. This means that you won’t have to pay for your mortgage for at least six months if the United States Department of Agriculture (USDA), Veteran Administration (VA), Freddie Mac,Federal Housing Administration (FHA), orFannie Mae backs your property.
You can easily use the Fannie Mac and Freddie Mac loan search sites if you are not sure who backs your mortgage loan.
Current statistics show that about 5 million mortgages in the U.S. have no federal backing and aren’t covered by the Coronavirus Aid Relief and Economic Security (CARES) Act. Considering the situation you are in, you should contact your lender in advance to find out what relief options are available for you.
Your susceptibility to eviction and foreclosure
Over 36 million federally backed mortgage owners stand to benefit from the recent federal moratorium to stop the nationwide evictions and foreclosures. Although the moratorium doesn’t apply to the larger 35% of mortgages held by private security labels and banking portfolios, most individual lenders are now working to provide homeowners with some kind of relief to cushion them.
The recently lifted Colorado moratorium on evictions now requires Denver homeowners to provide their non-paying tenants with a 30-day notice before evicting them. This has forced several homeowners and mortgage lenders to use the “cash for keys” strategy to cope with the apparent foreclosure crisis.
HUD-approved housing counselors refer to government trained and certified personnel that can help you assess your financial situation in relation to the economic downturn, evaluate viable options for cushioning your mortgage loan, and prevent foreclosure. You can use the look-up tool made available at the U.S. Department of Housing and Urban Development’s website to locate an experienced HUD-approved housing counselor within your proximity.
Protecting homeowners’ credit
Homeowners with federally backed mortgages don’t have to worry about missed payments because lenders are prohibited from dinging their credit score by the CARES Actduring their forbearance period. The national government is also urging private mortgage loan lenders to stop reporting late mortgage payments by eligible homeowners. To help protect your financial health during the unprecedented financial hardship, download and keep track of your credit reports from annualcreditreport.com.
When dealing with the impacts of COVID-19, prioritize to only work with trustable property managers and lenders to avoid being scammed.