The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. The CARES Act provides relief to homeowners with federally backed mortgages. The following outlines the relief available to homeowners affected by COVID-19.
DO I HAVE A FEDERALLY BACKED MORTGAGE?
Again, the CARES Act provides relief only to homeowners with federally backed mortgages. What if you don’t know. You can find that information at the links listed below:
- Fannie Mae mortgage look-up: www.knowyouroptions.com/loanlookup
- Freddie Mac mortgage look-up: http://ww3.freddiemac.com
While the CARES Act does not apply to private mortgages, some private mortgage companies may have their own Forbearance programs available to you because of COVID-19. Contact your mortgage company to inquire about your options.
RELIEF AVAILABLE UNDER THE CARES ACT
Foreclosure Moratorium – mortgage companies cannot foreclose for 60 days after March 18, 2020. However, the moratorium on foreclosures have been extended until August 31, 2020.
- Mortgage companies cannot commence nor finalize foreclosure judgments until August 31, 2020.
- This protection applies to both judicial and non-judicial foreclosure proceedings.
Forbearance Agreement – homeowner has a right to request a forbearance agreement if he or she has experienced a financial hardship due to COVID-19. A forbearance agreement “pauses” mortgage payments for a period of time. The “paused” payments are not erased. The payments must be paid in the future.
- Homeowner may get a forbearance of mortgage payments for up to 6 months.
- Homeowner MUST request a forbearance agreement. The mortgage company will not grant one without a request from the homeowner.
- No loan documents are required to make a request for a forbearance agreement.
- Homeowner only has to claim he or she experienced a financial hardship due to COVID-19.
- Homeowner can request an extension of the forbearance of payments.
- Forbearance of payments ordinarily start at 3 to 6 months but can be extended up to another 6 months for a total of 12 months.
- Mortgage company cannot charge additional fees, penalties or interest (beyond the scheduled interest) in connection with a forbearance agreement.
Repaying “Paused” Payments under a Forbearance Agreement – the repayment options under a Forbearance Agreement may differ depending on the type of federally backed loan. The following is repayment information for some federal loans:
- Fannie Mae and Freddie Mac Loans
- Repay the past due amount within 12 months after the forbearance ends;
- Extend the loan repayment term by the number of months in the forbearance (may result in an increased monthly payment);
- Add past due amount to the loan balance and extend the loan term by the number of months necessary to keep the monthly payment the same;
- Or, add past due amount into the loan balance and extend the loan term to a total 40 years (extra 10 years).
- FHA Loans
- Repay past due amount within 6 months after the forbearance ends;
- Extend the loan repayment term to 30 years and add the past due amount into previous monthly payment (to keep monthly payment the same);
- Or, pay the past due amount at the end of the loan lump sum.
- VA Loans
- Similar to FHA Loans.
- USDA Loans
- Repay past due amount within 6 months after the forbearance ends;
- Add past due amount to loan balance and extend mortgage term to 30 years as long as the payment is less or equal to the previous payment;
- Or, pay the past due amount at the end of the loan lump sum.
Florida Moratorium on Evictions and Foreclosures – Florida placed a moratorium on both evictions and mortgage foreclosures in March.
- This state moratorium applies to both federally backed and private mortgages.
- The moratorium was extended by Governor DeSantis until August 1, 2020.
- As August approaches and new COVID-19 cases continue to grow, the governor may again extend the moratorium.
- The moratorium only applies to a mortgage encumbering your residence.
- As such, it does not protect a rental property.
If you are in need of bankruptcy assistance or have questions about bankruptcy, please call (772) 873-7794 to schedule a free consultation.