COVID-19 and HOMEOWNERS MORTGAGE RELIEF
Are you among the millions of homeowners unable to pay your mortgage due to the CCP COVID-19 pandemic?
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) gives homeowners with “federally backed mortgage loans” temporary protection from foreclosure by establishing a foreclosure moratorium and forbearance of mortgage payments. Federal Bank Regulators have issued voluntary guidelines for Federal Banks.
What agencies issued, purchased or backed a “federally backed mortgage loan”?
- Fannie Mae or Freddie Mac;
- S. Department of Veterans Affairs (VA);
- Federal Housing Administration (FHA), including home equity conversion (HECM) reverse mortgages, and mortgages under the Indian Home Loan Guarantee program; and
- S. Department of Agriculture (USDA).
How do you know if your mortgage is a “federally backed mortgage loan?
- Look at your closing paperwork or monthly statement.
- Obtain a copy of the security instrument at the recorder’s office.
- Use the look up tool on the Fannie Mae website: Http://www.knowyouroptions.com/loanlookup
- Use the look up tool on the Freddie Mac website: https://ww3.freddiemac.com/corporate
- VA loans include a clause saying “THIS LOAN IS NOT ASSUMABLE WITHOUT THE APPROVAL OF THE DEPARTMENT OF VETERANS AFFIARS OR ITS AUTHORIZED AGENT”
- FHA Loans normally have the FHA case number at the top of the note and security instrument. HECM loans usually say “Home Equity Conversion” on the note and security instrument. A charge for the FHA Mortgage Insurance Premium or “MIP” on the HUD-1 or closing disclosure and on borrower’s monthly statement. Ask HUD’s National Servicing Center at 877-622-8525.
- Call the servicer.
- Send a “Request for Information” (RFI) seeking the identity of the mortgage owner to the servicer’s “exclusive address” for receipt of RFI’s. Find the address on the servicer’s website or a recent account statement. Servicer has 10 business days to respond.
Actions to take if you occupy the property:
- If there is a scheduled foreclosure contact the servicer’s attorney and request the sale is cancelled.
- If you were delinquent before or after 3/13/20, request a forbearance from the servicer based on you “experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency.”
- The Cares Act prevents fees, penalties, or interest beyond that amount that would be charged if the borrower is making timely payments to accrue during the forbearance period.
- Your credit report will continue to show the same status as before the forbearance. If you were current, the loan will be shown as current.
- If a HAMP Modification was in “good standing” when you enter a CCP COVID-19 forbearance plan then you will remain in “good standing” during the active forbearance plan, during a transition to a reinstatement, active repayment plan or settled CCP COVID-19 payment deferral.
- If an application for loss mitigation and payment is in process, the CCP COVID-19 forbearance period extends the time for the servicer to consider the application by the forbearance period.
- An additional 180-day extension can be granted upon borrower’s request.
- The borrower can request to terminate the forbearance early.
What happens at the end of the forbearance?
- The borrower is legally obligated to pay the principal, interest, and escrow payments that would have come due during the forbearance period.
- The missed payments can be made in a lump sum, through a repayment plan that adds a portion of the missed payments to the regular monthly payment, or a loan modification.
- The servicer of a Fannie Mae and Freddie Mac loan must contact the borrower at least 30 days before the forbearance ends and evaluate borrowers for one of several loan modifications.
- The servicer of a VA Loan must contact the borrower at least 30 days before the forbearance ends for all loss mitigation options in the VA Servicer Handbook and is prevented from requiring a lump sum payment.
- FHA owner-occupant borrowers with CCP COVID-19 related hardships that were current or less than 30 days past due as of 3/1/2020 should be evaluated for home retention options; and FHA owner-occupant borrowers with CCP COVID-19 related hardships that were not considered current as of 3/1/2020 who want to retain their homes, must be evaluated for loss mitigation options.
- The servicer for USDA Guaranteed loans must offer a repayment plan if the servicer determines the borrower can resume regular payments. The borrower can request an extension of the loan at least the length of the forbearance period. If the borrower cannot resume normal payments, the servicer must evaluate the borrower for Loss Mitigation options.
Homeowners who do not have a Federally Backed Mortgage Loan
- In California the Tenant, Homeowner and Small Landlord Relief and Stabilization Act of 2020 became effective 8/31/2020. Contact your servicer and request a forbearance along with other options that may be available.
- If your request is denied, your servicer must provide you with a detailed description explaining why. If the explanation identifies missing information or errors in your request you have 21 days to update and correct your request.
- Additional homeowner protections before a bank can file a notice of default on your mortgage:
- You may contest a forbearance denial notice or 'servicer contact seeking payment' before the servicer files a Notice of Default.
- The Lender must file a Declaration of Borrower Contact and Forbearance Denial Notice when recording a Notice of Default.
- You have the right to file a lawsuit if the lender violates the law and harms you.
- Federal bank regulators have issued voluntary guidance to encourage Federal bank institutions to work with borrowers.
- Contact your servicer by phone, online or letter. If online, log in to your account to see the options offered. It may be possible to apply online. If writing a letter, check the servicer’s website or a recent account statement for the appropriate mailing address. In the letter ask for Loss Mitigation Options. Here is a sample:
To: [Your mortgage servicer
Your mortgage servicer’s address:
Make sure you use the address specifically for: “Qualified Written Requests- (QWRs); Requests for Information- (RFIs); and/or Notices of Error- (NOEs) found on your mortgage statement or on the servicer’s website]
From: [Your full name
Your street address
Your city, state, and ZIP Code]
RE: Request for Information
Mortgage Loan Number: [Your loan number]
I am writing to request the information described below in regard to the mortgage on my property at [Your home address].
I am requesting information regarding the identity of, and address or other relevant contact information for, the owner or assignee of my mortgage loan.
Please provide the full name, address, and contact information for any trust that owns my loan and the trustee
Please identify any federally related entity that owns, insures, or guarantees my loan, including Fannie Mae, Freddie Mac, the Federal Housing Administration, or the U.S.D.A. Rural Housing Service
I am having trouble payment my mortgage and recently [requested/received] a forbearance of my mortgage payments for __ months. I am writing to request information about the following:
- What the total amount due will be at the end of the forbearance period;
- Any and all loss mitigation options available to me at the end of that forbearance period. Please include information about all loan modification, repayment, deferment or other options available to address repayment of the amounts that became due during the forbearance period;
- Instructions on how to apply for and/or request each loss mitigation option; and
- The guidelines for determining eligibility for each loss mitigation option, including any investor guidelines that describe limits on loss mitigation options available for my loan.
[Add a full description of any additional the information you are requesting. Be as specific as possible.]
Tips for Homeowners:
- Servicer call centers are currently overwhelmed; try applying online through the servicer’s account portal
- When making a request by phone or by letter, if you have a financial hardship due to the COVID-19 emergency state that clearly
- Find out how long the forbearance will last. If your financial problems have not been resolved before the end of the forbearance, request an extension before the forbearance ends, the CARES Act entitles you to a forbearance period of up to 360 days.
- Find out what your options are for making up the payments at the end of the forbearance period. If a lump sum payment is impossible request other arrangements
- If you have an escrow account ask how escrow items are paid during the forbearance period. If your servicer pays then the servicer should continue to pay during the forbearance period. If you pay and you are unable to continue these payments, you should contact each payee.
- If you do not have an escrow account then you should continue to pay your property taxes, insurance, HOA fees and other home-related items if possible.
- If you believe you were improperly denied a forbearance or have other problems with your servicer, submit a complaint to the Consumer Financial Protection Bureau using its complaint portal https://www.consumerfinance.gov/complaint/
Should you request a Forbearance?
- If you can afford to make the payments it is better to continue making them because the payments skipped will come due sooner or later, you may be dissatisfied with repayment options and there is a risk your servicer will make mistakes processing the forbearance and unwinding such errors can be difficult.
- If you cannot afford to make the payments contact your servicer before you miss a payment. Requesting a forbearance is a better option than defaulting on the loan. Loans in default accrue extra fees, late charges, and property preservation inspections. Eventually the loan will be processed for foreclosure, and even if you reinstate the loan, a default and foreclosure will harm our credit more than a forbearance.
For further information see www.nclc.org for the article “Mortgage Relief for Homeowners Affected by COVID-19”, by Andrew Pizor and Geoffrey Walsh, September 1, 2020.