How The CARES Act Can Help You
On March 27, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. This $2 trillion aid package will provide financial aid to families and businesses, and also includes provisions for mortgage relief for homeowners and eviction protection for renters.
The CARES Act has a vast array of provisions and aid options that could help many of you. We’ve provided some highlights below and also included some other helpful information on what you can do if you are in financial need:
If Homeowners Need Mortgage Relief
Homeowners who have suffered a loss of income during the current coronavirus outbreak may be able to qualify for mortgage relief, either through reduced payments or a pause in payments.
Depending on the type of loan you have and who backs your mortgage, your relief options will differ and may or may not fall under the CARES Act provisions.
That is why homeowners must contact their mortgage service provider directly to work out a payment plan with them. Remember, your mortgage servicer is the one who currently receives your payments so check your mortgage statement for contact information.
Below is a rundown of current relief options; you can get more specific details and other helpful information on the Consumer Financial Protection Bureau (CFPB) website.
CARES Act Provisions for Homeowners
If your mortgage is a federally backed mortgage, you have two mortgage relief options (check with your loan servicer if you are not sure):
- Foreclosure Protection – If you fail to make payments on your mortgage, your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
- Forbearance Relief — This allows you to pause or reduce your mortgage payments for a limited period of time. You’ll have to repay any missed or reduced payments in the future. Under the CARES ACT, you have a right to request forbearance for up to 180 days. You also have the right to request one extension for another up to 180 days.
You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.
If your mortgage is backed by Fannie Mae or Freddie Mac
- Foreclosure Protection – The U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, have directed mortgage servicers to halt all new foreclosure actions and suspend those already in progress. The HUD order applies to single-family homeowners unable to pay their Federal Housing Administration-backed mortgages.
- Forbearance Relief — You will have the same forbearance relief as described above, plus you won’t incur late fees or have delinquencies reported to credit reporting companies. Foreclosure and other legal proceedings will be suspended.
- Helpful Websites: Get more details from the official websites of Fannie Mae and Freddie Mac.
Options – Mortgages Not Backed by Federal Government
If you have a mortgage loan that is not backed by one of the federal agencies or entities:
- Contact Your Servicer – Financial institutions are being encouraged to work with borrowers who can’t make mortgage payments due to COVID-19. See if your servicer can provide options for you at this time.
- State Mortgage Relief Options — Check to see if your state is providing any relief options for homeowners, including the suspension of foreclosures.
Don’t Panic But Protect Yourself
- Understand mortgage servicers are busy now. Loan servicers are experiencing lots of calls and questions right now so be patient if you’re waiting on the phone longer than expected. Have your account number ready to speed things along.
- Get written documentation. Get agreements and terms in writing and in detail once you are able to secure a mortgage relief option. Make sure your monthly statements reflect any assistance provided and check for errors.
- Beware of scams. Unfortunately, there will be scams out there that will promote false promises for mortgage relief due to COVID-19 right now. Be wary of any upfront fees, signing over your property title, requiring your credit card numbers, or making any payments to someone other than your service provider.
CARES Act for Renters
In addition to helping homeowners stay in their home, the CARES Act also prohibits rental evictions for 120 days on properties secured with a government-backed loan; and other state and local cities have prohibited evictions.
Other Benefits and Aid Available
Our goal today is to provide you with a starting point so that you can seek out the help you may need when it comes to your home and your financial needs.
Keep in mind that the CARES ACT offers other benefits that you may qualify for and receive, so be sure to understand what it offers and what assistance you can get.
If you are being impacted financially, the CARES Act may provide additional relief and aid to you — everything from a direct check if your income qualifies to waiving penalties for withdrawing from retirement, increased 401k borrowing limits, small business grants, and much more.
This Forbes article summarizes the CARES Act well.
Stay Informed and Reach Out
We hope this information reassures you that there is help out there right now if you are feeling any financial strain or will in the coming weeks. We hope that you’ll never need to look further into any of these relief programs, but please let others know about these resources, especially those in need.
Stay home and stay healthy. And don’t hesitate to reach out to us with questions or concerns.