We understand that this is a confusing and scary time for many homeowners during the COVID-19 pandemic. Many of you are wondering how you might make your next mortgage payment and what options you might have for protecting your families financially. The Center for NYC Neighborhoods is here to help homeowners like you bring much needed stability to your home and finances during this unprecedented crisis. Some mortgage relief measures have already been put in place, and new efforts to help homeowners are still being announced. We’ve gathered the most up-to-date information and resources on mortgage help below.
You may be able to temporarily stop paying your mortgage, but you need to talk to your lender first
If you’re worried about missing mortgage payments during this time, you may be eligible for a forbearance that allows you to temporarily stop paying your mortgage. Forbearance is not automatic. You need to contact your lender or mortgage servicer and explain that you have been affected by COVID-19.
The federal CARES Act enacted March 27, 2020, allows homeowners with federally-backed mortgages to request forbearance of up to 180 days, with another 180 days available if needed. New York State’s Department of Financial Services is also requiring servicers to provide forbearance of up to 90 days for homeowners with mortgages that are not backed by the federal government. Under these rules, most New York homeowners who are struggling to pay their mortgage due to the COVID-19 crisis should qualify for forbearance.
Unfortunately, due to the number of homeowners affected by the coronavirus crisis, many mortgage lenders are experiencing unprecedented call volumes. Visit your lender’s website to see their most current customer service options and contact information. You may be able to save time by contacting them through their website.
Finally, it’s critical that you make every effort to pay your mortgage until you have the opportunity to speak with your servicer or mortgage lender. Stopping payment on your mortgage before speaking to your lender could put you at risk of being eligible for future relief.
Forbearance can be complicated — make sure you understand how it works
The federal and state government are requiring most mortgage servicers to offer “forbearance” to homeowners having trouble paying right now. Forbearance allows you to stop making mortgage payments without fear of immediate foreclosure. But this is not a “mortgage holiday” — you still owe the missed payments and will need to make them up somehow when the forbearance ends. It is important to continue to work with your servicer when the forbearance ends; we can connect you with a housing counselor that can assist you.
Ask your servicer these questions about what will happen at the end of a forbearance:
- Will I be asked to make up all the missed payments at once, in a lump sum?
- What options are available if I cannot afford to resume my normal monthly mortgage payment at the end of the forbearance?
- How do I extend the forbearance if I still need more time at the end?
- Will you report negative information about me to the credit bureaus during or after the forbearance
Your mortgage “investor” affects your options for avoiding foreclosure
The entity that owns your loan is sometimes referred to as the “investor.” Depending on who your loan’s investor is, unless Congress takes further action, you may have better or worse mortgage payment relief options during and after the COVID-19 crisis. This is especially true when it comes to the end of a forbearance, and whether you may face foreclosure if you can’t immediately repay all of the payments you missed during forbearance.
For instance, homeowners with Fannie Mae- or Freddie Mac-backed loans may be able to avoid having to immediately repay all of the payments that were missed during a forbearance, and may qualify for a loan modification that moves the missed payments to the end of the loan. But, your servicer is only required to evaluate you for this assistance if one of these entities owns your loan, and you must have been current on your loan before this disaster in order to qualify. Other eligibility requirements may apply.
Since your investor determines your options for avoiding foreclosure at the end of a forbearance, you should find out who your investor is. The Consumer Financial Protection Bureau has more information on how to identify your loan’s investor here.
It’s OK if you’re confused. We’re here to help.
Be aware that scammers are actively posing as helpers for those struggling with the impacts of the virus. You should remain vigilant in protecting your home and finances. The Consumer Financial Protection Bureau is tracking known scams related to coronavirus. No one from the Centers for Disease Control or your mortgage servicing company should be stopping by your home.
If you’re concerned about scams or making your mortgage payment, we recommend that you get free advice from a counselor during these challenging times. Housing counselors can help you understand the full range of relief options available, including which mortgage forbearance and loan modification options you should apply for based on your individual circumstances. Give our Homeowner Hub a call today at (646) 786-0888 or by going to our online form. We can refer you to a local, community-based organization for help.