What to Do If You Can’t Pay Your Mortgage Right Now
Housing is one of your biggest monthly expenses. And if you have a mortgage that is stretched out over the next 10, 15 or 30 years, the uncertainty of the coronavirus pandemic will likely make you worry about how you will continue to pay that bill.
While the CARES Act, passed in late March to provide coronavirus relief, offers options for some mortgages, it is not a one-size-fits-all solution for homeowners.
Let’s take a look at your mortgage options and then take a look at the steps you should take based on your circumstances.
Federally Secured Mortgage Options
The Coronavirus Relief Act provides two protections for homeowners with federally backed mortgages:
- The foreclosure is suspended for 60 days from March 18, 2020. During this time, you cannot begin or complete foreclosure, and you cannot be evicted from an FHA insured home during this period.
- Homeowners facing financial hardship due to the pandemic may be eligible for a mortgage grace period, which pauses the payment schedule for up to 180 days. You can request an additional 180-day renewal when the initial one expires. You must ask your loan officer for leniency and they cannot charge any commissions or interest on your loan other than those normally accrued during your leniency.
If you pay off your mortgage in any of these locations, your mortgage is backed by federal support:
- Fannie Mae
- Freddie Mac
- U.S. Department of Housing and Urban Development (HUD)
- USDA
- Federal Housing Authority
- U.S. Department of Veterans Affairs
If you are not sure who owns your mortgage, you can find out about it through the Consumer Financial Protection Bureau .
Other mortgage options
If your loan is not secured by a federal agency, you are at the mercy of your lender. Fortunately, many financial institutions have advertised that they are taking action for clients affected by the pandemic on an individual basis.
“You will have to pay an amount that was suspended or reduced later, either in a larger monthly payment or in a lump sum,” explains Beatrice de Jong, consumer trends expert at Opendoor . “There are different plans depending on your bank and where you live, so it’s important to call your service provider to see what’s available for you.”
See below for the questions you want to ask your lender.
Call in advance and be patient
Several lenders have launched online forms where you can request payment devices due to the coronavirus. If you haven’t, you’ll have to call.
“The sooner you contact your mortgage lender, the better, so you have more time to explore your options,” said Diane Hughes, senior vice president and director of mortgages at UMB Bank . “You must be willing to explain your employment situation, how much you can afford to pay, and when you can resume regular payments.”
CFPB recommends that you provide your mortgage account number and other financial details when you call:
You may need to explain
- Why can’t you make a payment
- Whether the problem is temporary or permanent
- Detailed information about your income, expenses and other assets, such as cash in the bank.
- Regardless of whether you are a military personnel with Continuous Change of Order Stations (PCS)
Questions to ask
- What options are there to help you temporarily reduce or suspend my payments?
- Is there a deferral, loan change, or other options?
- Can you waive late payment penalties?
Several factors are colliding right now to increase the waiting time when you call your loan service provider. First, it is the pandemic nationwide, which means that customer service teams that may be adapting to work from home are dealing with a high volume of requests. In addition to federal placement, various states and cities have also adopted their own rules for helping homeowners during the coronavirus, making any situation more difficult.
Remember a few weeks ago when interest rates dropped and everyone wanted to refinance their mortgage right away? Lenders continue to deal with these accounts and remain interested in refinancing opportunities. de Jong says.
“Because it can take a long time to get a phone call from a loan officer, you need to contact your mortgage officer immediately — as soon as you decide you cannot pay off your mortgage or can only pay off part of the loan. about it, ”says Hughes.
Understand the details
After you reach an agreement with your loan agent, be sure to ask for it in writing in case there are any errors in your account in the coming months. You will want to take a close look at your monthly billing statement to make sure it is accurate, and keep an eye on any correspondence from your lender that might indicate policy adjustments or changes.
Once you are back on your feet, CFPB recommends that you call your service staff again and resume payments as soon as possible. Even though you can stay on the deferral for several months, renewing payments reduces the amount of money you pay on your mortgage later, as interest continues to accrue while your mortgage is on hold.