It’s no secret that the COVID-19 shutdown and shelter-in-place orders have resulted in job losses or reduced income for millions of homeowners nationwide. If you are among those financially impacted by the pandemic, you may be concerned about how you will be able to pay your mortgage during these unprecedented times. Federal and state governments, as well as financial institutions and loan servicers have announced plans to help struggling homeowners. The following summarizes some of the mortgage relief options that may be available to you.
CARES Act Relief Options for Federally Backed Mortgages
A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts in place two protections for homeowners with federally backed mortgages:
- Lenders and loan servicers may not foreclose on you for at least 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period.
- If you have a financial hardship directly related to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.
If you don’t have a federally backed mortgage, you still may have relief options through your mortgage lender or loan servicer.
Are there any Mortgage Relief Options Mandated by the State of California?
There is no mandate, but the State of California is working to soften the financial impact of COVID-19 on residents who are struggling to pay their mortgage. Citigroup, JP Morgan Chase, US Bank, Wells Fargo, and nearly 200 state-chartered banks, credit unions, and servicers have committed to providing relief for consumers and homeowners in California. Under the Governor’s proposal, Californians who are struggling with the COVID-19 crisis may be eligible for the following relief upon contacting their financial institution:
- 90-Day Grace Period for Mortgage Payments – Financial institutions will offer, consistent with applicable guidelines, mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19. In addition, those institutions will:
- Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
- Confirm approval of and terms of forbearance program; and
- Provide borrowers the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.
- No Negative Credit Impacts Resulting from Relief – Financial institutions will not report late payments to credit reporting agencies, consistent with applicable guidelines, for borrowers taking advantage of COVID-19-related relief.
- Moratorium on Initiating Foreclosure Sales or Evictions – For at least 60 days, financial institutions will not initiate foreclosure sales or evictions, consistent with applicable guidelines.
- Relief from Fees – For at least 90 days, financial institutions will waive or refund mortgage-related late fees for customers who have requested assistance.
How Can Homeowners Request a Mortgage Relief Option?
Homeowners must contact and work directly with their mortgage lender or servicer to learn about, and apply for, available relief. Specific mortgage relief options will vary depending on the lender or servicer, but most are offering forbearance and loan modification programs. Other types of relief may apply to your circumstances. Please note that financial institutions and their servicers are experiencing high volumes of inquiries.
If you need help working with your lender or servicer, or advice understanding your mortgage relief options, you may want to reach out to a professional. Our team of business and real estate attorneys have many years of experience working with financial institutions, and we can help you get through these tough times. Reach out to us Garmo & Garmo today at (619) 441-2500, send us an email, or message us online for a free consultation.