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Mortgage help is available for homeowners during the covid-19 crisis

Furloughs, layoffs, reduced wages and commission during the covid-19 crisis have left some unable to make their mortgage payments. There are plans in place from the government and lenders that can help. (iStock)

While the medical community battles covid-19 and saves as many lives as possible, the economic fallout from stay-at-home measures continues. The swift wave of unemployment and the financial hardships from furloughs, reduced wages and commission cuts have left many homeowners worried about how they will make their mortgage payments in coming months.

One piece of potentially good news: The devastating impact of the foreclosure crisis and the Great Recession provided some preparation for lenders and government agencies in this latest crisis.

The Consumer Financial Protection Bureau provided guidance on what to do if you can’t pay your mortgage and what options are available as part of the Cares Act signed into law March 27. If you are unable to make your mortgage payment, it’s important to call your lender as soon as possible. Reaching your lender can take some time because financial institutions are overloaded with calls right now.

The main payment relief option is forbearance, which means you can stop making mortgage payments for six months or longer depending on your loan and your financial circumstances. Typically, forbearance means you still owe the mortgage payments and must determine with the help of your lender whether you must make up the back payments in full when forbearance ends, repay over a year or add them to the end of the loan.

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Under the Cares Act, federally backed mortgages, which include loans owned by Fannie Mae and Freddie Mac and those guaranteed by the Department of Veterans Affairs, the Department of Agriculture and the Federal Housing Administration, must allow for deferred or reduced mortgage payments for up to six months and then another six months if requested.

In addition to calling your lender, you will need to know who owns your loan. The CFPB’s page has links to help you determine who owns your loan. You’ll need to provide details about your financial hardship.

For FHA borrowers, the Covid-19 National Emergency Partial Claim allows homeowners to receive a special interest-free second loan to cover their mortgage payments during forbearance that does not require repayment until their first mortgage is paid in full.

For information on FHA’s assistance, click here.