The coronavirus (COVID-19) outbreak is having a substantial impact on the financial lives of many. According to a March 26, 2020 report, a record 3.3 million unemployment claims came in during a single week. That’s a nearly twelvefold increase from the week prior. This is far above economist forecasts of 1.5 million. Many of those facing layoffs or pay cuts are scrambling to make ends meet. Finding coronavirus mortgage relief during the outbreak is becoming a priority. Luckily, it’s increasingly becoming available.
What is Coronavirus Mortgage Relief?
COVID-19 mortgage relief can include a range of programs that help those affected by the outbreak to manage their housing costs. This includes federally mandated steps and voluntary options created by individual lenders.
Typically, mortgage relief comes in the form of temporarily reduced payments. This also include short-term interest rate reductions, or other loan modifications. It also includes forbearance or payment deferment programs. Which gives homeowners the ability to skip mortgage payments without incurring late fees or having missed payments reported to credit bureaus.
Federal Regulator Guidelines for Coronavirus
Federal regulators – using Fannie Mae and Freddie Mac as vehicles – released guidelines regarding homeowner assistance during the coronavirus disaster. Foreclosure sales and evictions were suspended for 60 days. Homeowners may also be eligible for forbearance plans lasting up to 12 months.
With a forbearance plan, payments can be suspended without the homeowner having to incur penalties. These include late fees or missed payments on their credit reports. Once the forbearance plan is over. The guidance promotes working with the homeowners further to find reasonable mortgage repayment approaches.
Homeowners whose loans are guaranteed by Fannie Mae or Freddie Mac may qualify for the benefits above, depending on their unique situation. Those who use other lenders may find that their options are different. Those above aren’t federally mandated. Instead, they are just guidelines.
Is Coronavirus Mortgage Relief Loan Forgiveness?
No, at this time, the coronavirus mortgage relief programs don’t involve loan forgiveness. Any payments that the homeowner defers will be tacked onto the end of the mortgage repayment period. Effectively extending it according to the number of deferred payments.
Additionally, COVID-10 mortgage relief might allow interest to accrue during the forbearance period. When this occurs. That amount is added to the loan balance and does have to be repaid by the borrower.
Getting COVID-19 Mortgage Relief
If you’re feeling the financial impact of the coronavirus outbreak, you may be eligible for mortgage relief. For example, in California. Homeowners can receive a deferment for a minimum of three months. According to an announcement by Governor Gavin Newsom.
However, what is available to a homeowner depends on multiple factors. As a result, it’s best to contact your lender directly for a few reasons. First, aside from anything mandated by federal or state government entities. They will ultimately determine which options are available and who qualifies for assistance.
Second, even if you qualify, none of the benefits begin automatically. You have to reach out to your lender to confirm you are looking for mortgage relief. Otherwise, they won’t update your account accordingly.
Don’t Just Miss A Payment
Those who simply miss a payment without contacting their lender could have to deal with financial penalties. This could include late fees, missed payments reported on credit reports. As well as, any other ramification outlined in your mortgage agreement. That’s why contacting your lender as soon as you think you may be in trouble is so critical.
Once you reach out, you may need to take additional steps. Verbal confirmation that you are feeling adverse financial effects due to COVID-19 isn’t typically enough over the long-term. However, it could be sufficient to get you protection while the rest of the process unfolds. You may need to submit documentation. Such as proof that you are now on unemployment or that your income has been cut. However, this requirement might not be immediate.
Could More Mortgage Relief Options Become Available?
It’s important to note that the coronavirus situation is still incredibly fluid. New state and federal mandates may arise at any time that alter the mortgage relief landscape. This could spur the creation of new programs. Change requirements for existing options and a number of other outcomes.
Ultimately, homeowners should strive to pay their mortgages if they are able. For those who run into financial trouble. Reach out to your lender and see what programs are available. There may be a mortgage relief plan that will meet your needs. Which makes it easier to navigate these odd and complicated times.
Is the impact of the coronavirus outbreak making it hard for you to pay your mortgage? Have you found relief, or are you planning on asking for mortgage help? Share your thoughts in the comments below.
Read More:
- Coronavirus Outbreak Leads to Shockingly Cheap Flights
- How to Pay Bills During the Coronavirus Pandemic
- Coronavirus Means Working from Home for More People
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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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