What You Can Do to Avoid Mortgage Foreclosure During Covid-1926 Nov 2020, by Foreclosure in
Written by Timothy Czekaj
When the Covid-19 pandemic hit the United States in February 2020 serious personal financial issues came with it as millions were laid off and businesses closed. Within three months of Covid-19 coming to America, more than 4.1 million homeowners were skipping their mortgage payments, according to data from the Mortgage Bankers Association. As a homeowner, you may be wondering what you can do to avoid mortgage foreclosure during the pandemic.
Fortunately, there are some strategies that can help save your home during these difficult times. Some are available pursuant to state and federal laws passed specifically to help those affected by Covid-19, while others are common foreclosure avoidance measures.
The experienced Newport, PA mortgage foreclosure lawyers at Czekaj Law, LLC, understand how important your home is to you and want to help. It’s hard enough surviving a global pandemic, but to face losing your home as well is a terrible and scary situation.
Contact us right away if you’re behind in your mortgage and need relief. The quicker we can get to work on your behalf, the better the outcome. Call Czekaj Law, LLC at (717) 275-9770 or use our online form to schedule an appointment.
Mortgage Help During Covid-19
In response to the extraordinary economic upheaval caused by Covid-19, Congress first passed the Families First Coronavirus Response Act (FFCRA), in part providing paid sick and family leave, and then the Coronavirus Aid, Relief, and Economic Security (CARES) Act, with economic stimulus, such as business loans, additional unemployment payments, and consumer protections. Some states also provided protections to renters and homeowners. But Pennsylvania’s programs shielding residents from eviction and foreclosure ended on August 31, 2020.
There are several ways to ward off foreclosure. Let’s discuss two of them: forbearance and payment deferral.
Under CARES, a homeowner with a federally backed mortgage loan who has financial hardship due to Covid-19, can get a forbearance on the mortgage payments of up to 360 days. A forbearance is a period when your lender allows you to make reduced payments, or no payments, until a future date. The missed payments will have to be paid at some point. If you’re eligible for this relief, you must request it. It is not automatic.
Not sure if your loan qualifies? Let us help you determine that information. If your loan isn’t federally backed, it doesn’t mean you can’t get help. Most private lenders moved quickly to offer relief to homeowners given high unemployment and the continued economic downturn. Exactly how many months of forbearance offered, and repayment terms can differ from lender to lender.
By working with our firm, we can help secure a forbearance by:
- Determining what company services your mortgage and if the mortgage is backed by the federal government through Fannie Mae or Freddie Mac.
- Communicating with your mortgage lender or servicer about your hardship. We will have worked through your finances with you so that we can explain why you need to lower or stop mortgage payments for a while.
- Carefully walking through what happens after the forbearance period ends. The last thing you need is to be unpleasantly surprised at the end of a forbearance with what your options are about repaying the months you missed.
- Keeping detailed records. There are millions of people in the same boat as you and mortgage providers are swamped. We need to make sure all your documentation is safely kept so that if any mistakes are made, such as being sent to foreclosure or having your missed payments reported to the credit bureaus, we can resolve it.
- Timely requesting an extension of the forbearance if you need it. Depending on the lender and your circumstances, you may qualify for an extension of the forbearance if needed. But there are usually deadlines set by lender or servicer that can’t be missed.
Understanding your obligations after your forbearance ends is important. Here are the options:
- All payments missed immediately due after forbearance ends.
- Payment reductions payback spread out over the same amount of number of months it was lowered. For example, you paid $500 a month instead of $1000 for 12 months. When the forbearance ends, you’d pay $1500 a month for 12 months to make up the difference.
- Payments missed are added to the end of your loan and extend the repayment time by the number of months missed.
Some lenders will suggest the only way to avoid foreclosure is if you bring the loan current immediately upon your forbearance ending. If you’ve been in forbearance for a significant number of months, that can be a scary thing to hear. But by working with our mortgage attorneys, we can negotiate the best repayment plan.
Mortgage Payment Deferral
Some borrowers may have an additional solution through a mortgage payment deferral program offered by Fannie Mae and Freddie Mac at the direction of the Federal Housing Finance Agency (FHFA). Unfortunately, this payment deferral program doesn’t apply to FHA, VA, and Guaranteed Rural Housing mortgages. The official start of the program is slated for January 1, 2021, but some servicers have already started evaluating borrowers for it.
Under the program, those negatively affected by Covid-19 may be eligible for a deferral option. The program is for those who can resume regular monthly mortgage payments but can’t bring their loans current with a lump sum or with a repayment plan. These borrows could have the option to defer the past due balance to whichever date comes first:
- mortgage maturity date
- loan payoff date
- sale or transfer of the property date
Behind on Your Mortgage Due to Covid-19? Let Us Help
The pandemic has caused tremendous hardship to homeowners who have lost their livelihoods and can’t afford their mortgage payments. You may not know where to turn for help with saving your home. Our mortgage foreclosure lawyers can help. Legal options exist and our experienced, caring team of professionals will work hard to keep you out of foreclosure during these troubled times.