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Manage mortgage during the Coronavirus pandemic?

For most of us the largest single purchase in our lives, and the most important, is our home. To make the purchase, most of us need to borrow and use the home itself as security for the loan. The loan is usually arranged through a ‘loan (mortgage) servicer’.

If for ANY reason you cannot pay your mortgage (or rent), are in danger of falling behind or can only make a part payment, your mortgage servicer (property owner) should be your first call.  Make the call as soon as you anticipate not being able to meet a payment by the due date.  If you take early action you stand a better chance of avoiding any damaging effect on your credit score.

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What are the Coronavirus mortgage (and rental) relief options?

Most mortgages are federally backed, and the recent legislation the Coronavirus Act, Relief, and Economic Security (CARES) Act put in place protection for both mortgagees and renters.

The major option for mortgagees is to seek ‘forbearance’ for up to 180 days and the right to request an extension for a further 180 days. In effect, if your financial difficulties are coronavirus related you may apply for a forbearance period of almost a year.  During your forbearance period, your monthly mortgage payment will be suspended but WILL be added to your account to be repaid at some time in the future.  The terms of these repayments will depend on your loan servicer.

You must contact your loan servicer (have your account number to hand) to request ‘forbearance’ but you do not need any further evidence.

For many people, the period of forbearance will be a financial lifeline that offers you and your family security in troubled times. Nevertheless, in most cases, if you can pay your mortgage you should do so, and if you opt for a period of ‘forbearance’ take the chance to end it as early as practical.

The Consumer Finance Protection Bureau (CFPB) and other financial regulators have encouraged financial institutions to work with borrowers (especially mortgagees) who are unable to meet their obligations because of the effect the pandemic is having on their financial situation (a pandemic related financial hardship).

The CFPB website (https://www.consumerfinance.gov/coronavirus) provides a full description of your options. BUT make YOUR LOAN SERVICER your FIRST POINT OF CONTACT.

Many states have implemented or are planning to implement relief programs that add to the federal initiatives which may include suspension of foreclosures.   You should check your state’s web site for details of the specific benefits that may be available to you (https://www.usa.gov/states-and-territories)

BUT WE RENT our home! 

Your property will be covered by the CARES act if the owner has a federally backed mortgage. The Act provides that in no case can you be evicted for non-payment of rent before the end of June (2020) and thereafter without providing you 30 days’ notice.

If your property is not covered by the CARES act, check your options with your state government on their website.  Many states have suspended evictions and foreclosures due to the pandemic.

In difficult times such as these, it is in no one’s interest to create homelessness.  It is important to work with your ‘loan servicer’ or landlord to agree to a formal course of action and to have it confirmed in writing. Hope this information helps you to manage mortgage during Coronavirus pandemic.

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