As the coronavirus began sweeping through the country in March, many states issued shut-down orders for businesses, putting as many as 40 million people out of work by May. On March 27, Congress passed the CARES Act to offer economic relief to those affected by the shut-downs, expanding unemployment benefits and offering mortgage forbearance to homeowners with mortgages backed or insured by the federal government, including Freddie Mac, Fannie Mae, VA and FHA.
Under the CARES Act, homeowners can ask for forbearance from their mortgage servicer and suspend payments for up to 12 months. There are now more than 4 million mortgage loans in forbearance, and we know that homeowners have many questions about the specifics of the program. We have partnered with Freddie Mac to bring you this FAQ page to answer those questions and provide updates to the program.
Our goal is to provide a resource that is continuously updated with the latest news and information on forbearance so that lenders, servicers and homeowners can work together during this period of crisis and recovery.
Sarah Wheeler, HousingWire Editor in Chief
FHFA, FHA remind servicers of mortgage relief options as coronavirus spreads.
Nearly 3 million borrowers are already in forbearance.
Fannie Mae, Freddie Mac tell borrowers that mortgages in forbearance do not need to be paid back all at once.
Fannie Mae, Freddie Mac announce that borrowers in forbearance can defer all missed payments until the end of their loan.
The Federal Housing Finance Agency on Wednesday extended the foreclosure and eviction moratorium for borrowers with mortgages backed by Fannie Mae and Freddie Mac until “at least” Aug. 31.
A report from the Mortgage Bankers Association reveals the share of mortgage loans in forbearance has fallen for the fourth consecutive week.
What is mortgage forbearance?
Forbearance is the temporary postponement of mortgage payments negotiated between a borrower and lender for repayment relief. This does not mean the loan is forgiven, rather, payments are deferred until the end of the forbearance period.
How do I request mortgage forbearance?
To request mortgage relief under the CARES Act there are two options:
You can phone your loan servicer directly. Your servicer is the company that you send your mortgage payments to each month and the number should be available on your payment statement or online.
You can write and send a hardship letter affirming that you are enduring financial distress brought about by COVID-19. This creates a written record that you are pursuing forbearance protection. Letters may be emailed, faxed, or physically mailed to your mortgage servicer.
Will I need to repay my missed mortgage payments in one lump sum?
No, though that is an option if you have the financial capability and would like to. Otherwise, you can:
Negotiate a payment plan, that will make upcoming payments slightly larger
Modify the existing loan, which may include a reduction of interest rates, an extended loan term or both.
How does my mortgage transition into forbearance?
If your servicer approves your request, you will be provided a forbearance agreement outlining the terms. During the forbearance period, the servicer must not initiate or continue with foreclosure proceedings.
How does it transition out?
Before the end of your forbearance period, your servicer should reach out to you to negotiate end of forbearance terms for repayment and possible extensions in certain situations, or a relief or workout option following forbearance.
Am I eligible to refinance my mortgage after my forbearance period ends?
Yes, but there are stipulations. Borrowers are eligible for refinancing with GSE backing three months after their forbearance ends as long as they have made three consecutive payments under their repayment plan, or payment deferral option or loan modification.
Borrowers who went into forbearance, but continued to make their mortgage payments, are eligible to refinance as long as they are caught up on their mortgage.
Are there eligibility requirements?
Yes, if you have experienced job loss, reduced income, illness or other issues related to COVID-19 you could be eligible for forbearance.
If I was on a forbearance plan, or was delinquent prior to my COVID-19 related hardship, am I eligible for forbearance now?
Yes, under the CARES Act, if you have a pandemic-related financial hardship you are eligible for a COVID-19 forbearance plan regardless of and any previous hardships or delinquencies.
Can the forbearance be extended and for how long?
Yes, under the CARES Act, if you have a federally backed mortgage, you can request an extension of the forbearance for up to an additional 180 days.
Does forbearance affect your credit score?
As part of the CARES Act, mortgages in forbearance due to COVID-19 cannot be reported negatively to the credit bureaus by lenders.
Are investment properties eligible for forbearance?
Yes, borrowers impacted by COVID-19 are eligible for forbearance regardless of whether their property is owner-occupied, a second home or an investment property.
What are my options after forbearance if I can’t afford a reinstatement or repayment plan?