Mortgage Relief 2020
It is not every day that the world gets hit by a pandemic that threatens to wipe out all humanity. It is another thing when it catches everyone off-guard. Life was already difficult as it is. Some were already burdened with bills to pay, others unable to pay for mortgages and on the verge of losing their homes. What we call unprecedented times simply amplified the problems thousands have faced for years.
Mortgage relief is certainly not a new word on the street, as perhaps 2020 was one of those years when it was handed out most. Before we get into detail, let us understand what mortgage relief is.
What is a mortgage relief program?
A mortgage relief program is more like aid or protection from lenders by completely suspending payment or reducing the repayable amount for a certain period due to the inability to repay the loans and agreed interests. When you acquire a mortgage relief, you acquire security over your property, and payments are waivered for an agreed period. One form of mortgage relief is forbearance, which is when the lender gives you the grace of pausing or reducing your mortgage payments for some time as you get things back in order.
The 2020 mortgage relief
When the COVID-19 pandemic hit, many people lost their sources of livelihood; those who were lucky to have jobs saw a huge cut on their paychecks. Indeed the majority were negatively affected financially. Federal agencies and government-sponsored enterprises had to step in to cushion borrowers by providing mortgage relief options to those affected. Fortunately, some state governments and private lenders followed suit. However, it is crucial to note that acquiring forbearance or a mortgage relief is not automatic. There are several steps and procedures to be followed to get help from the program(as we shall see later in this article).
After a few weeks into the Covid-19 pandemic, U.S. lawmakers found it fit to pass a bill that would elevate the impact of the virus on the economy. The $2 trillion stimulus bill, known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was signed on March 27, 2020. It was designed to provide financial support to small and large enterprises, industries, independent contractors’ hospitals, families, individuals, and gig workers. However, the conditions for eligibility did not make it easy for citizens. The relief program applied to loans backed by government-sponsored enterprises(GSE) and the federal government.
Mortgages affected by the COVID-19 mortgage relief program
The mortgage relief 2020 was set to benefit most homeowners. Most beneficiaries were those that had federally backed loans. The loans affected were those backed by:
- The Federal Housing Administration(FHA)
- The U.S. Department of Housing and Urban Development(HUD)
- American Indian families and Hawaiian housing
- The U.S. Department of Veteran Affairs
- U.S. Department of Agriculture (USDA)
- Freddie Mac or Fannie Mae
How to know If you are eligible for the mortgage relief 2020
Most homeowners qualify for a mortgage relief, otherwise known as forbearance, due to the global COVD-19 financial hardship. The institutions listed above cover the majority of the loans. However, if you are not sure whether your loan falls under any of these categories, you can always find out through the following ways:
- Contact your mortgage servicer-you can call or write to your mortgage for inquiries. Typically, the servicer should provide all your mortgage lender’s contact information( name, address, and phone number or email). This information is usually listed on the statement.
- Search online- there are helpful loan lookup tools for loans from Fannie Mae or Freddie Mac providers.
- Search on the Mortgage Electronic Registration Systems(MERS)- THE MERS is a repository or website that contains the database of all registered mortgage loans. Therefore, it is a go-to if you don’t know your provider.
How to request a mortgage relief?
As mentioned earlier, admission into the relief program is not automatic. Usually, mortgage lenders will ask for proof of financial hardship, which you can usually do via phone. However, the pandemic itself was a hardship; therefore, mortgage servicers of federally backed loans cannot ask for proof. Earlier own when the pandemic was setting in motion, several homeowners had trouble reaching their services via phone. That was understandable, as the traffic of requests must have been overwhelming.
Today, most servicers have significantly had to increase their capacity to accommodate the high demand for a response. Customers now have the option to reach them online via their respective websites. It is also vital to stay wary of scams that require customers to pay for forbearance. Mortgage loans covered by the program offer services to customers at no cost.
What are the benefits of acquiring a mortgage relief?
A mortgage relief program does more than suspend the borrowers’ payment for a limited period. Some of the benefits packaged under the program include:
- Zero interests, late fees, and additional penalties-Late repayments of loans usually come with hefty penalties, but a forbearance protects you from all the additional costs for granted period
- No reports to credit bureaus- forbearance offers the security from lenders who would usually report loan defaulters to credit bureaus, consequently affecting your credit rating.
- No evictions and foreclosures- for the COVID-19 mortgage relief, the government granted a moratorium on foreclosures and evictions for all federally backed mortgages.
What If I still cannot service my loan after the forbearance period?
Getting back on your feet may take some time, perhaps longer than expected. Most institutions give borrowers up to 180 days of forbearance with a possible extension of several months. For example, the FHA offered forbearance of 12 months and up to two additional extensions of three months each. This means you can secure FHA forbearance for a cumulative period of 360 days.
There is no need to wait till the end of your forbearance to request an extension. It is always best to reach out to your mortgage servicer as soon as possible and negotiate on all the options on the table. Alternatively, you can always explore additional assistance, which may come in reduced monthly payments or loan modification.
You can also source additional help from other programs funded by the Consolidated Appropriations Act and the American Rescue Plan Act of 2021 under the Homeowner Assistance Fund and the Emergency Rental Assistance Program.
Bottom line
The new Biden-Harris administration did not offer a mortgage relief but extended the foreclosure moratorium and mortgage forbearance enrollment period. Therefore any news stating otherwise is false. If you are struggling, there has to be a way out. Whether or not the federal government backs your loan, always take the first step to reach out to save yourself a lot of trouble.