The response by Congress, federal and state regulators, and even individual lenders and landlords, has been swift when it comes to homeowners and tenants impacted by the coronavirus pandemic. Check out this article for resources to put into action if you’re an owner or renter during this time.
The response by Congress, federal and state regulators, and even individual lenders and landlords, has been swift when it comes to homeowners and tenants impacted by the coronavirus pandemic. If you opt to take advantage of the benefits being dangled your way, even if you have no choice but to take what’s being offered, you eventually will have to pay the piper.
The choices are free now, though. There are no fees, penalties or additional interest. You might not even be called upon to document a COVID-19 financial hardship, thereby removing an obstacle that stymied some borrowers the last time around.
Here’s a summary of what government and private enterprise are doing at this writing to help keep people in their homes:
Halted Foreclosure Proceedings
If your mortgage was sold to Fannie Mae or Freddie Mac, all foreclosure proceedings, no matter the reason, have been halted as of March 13. But, owners of vacant or abandoned properties need not apply.
To find out if your loan is owned by either of these two companies, which buy loans from local lenders and package them into securities for sale to investors worldwide, check your loan documents or call the company which collects your monthly payments. You can also check out Fannie
’s websites. Foreclosures on loans insured by the Federal Housing Administration
have been stopped for 60 days as of March 18. The same goes for USDA loans, as of March 19.
“The last thing any of us want is for Americans to lose their homes,” said Housing and Urban Development Secretary, Ben Carson. “If you’re struggling, immediate help is now available.”
Forbearance on Loans
Forbearance is available for up to a year on these loans, meaning you may not have to pay your mortgage for as long as 12 months. However, the rules may differ with government loans. Borrowers facing financial difficulty because of the pathogen are eligible for forbearance for up to six months, and lenders must provide an additional six months of forbearance if you ask, so check with your loan servicer. But no matter what, missed payments won’t be reported to credit bureaus, so your credit score should not suffer.
As many as 300,000 borrowers have already inquired with Fannie Mae and Freddie Mac about forbearance, according to Federal Housing Finance Agency
Director, Mark Calibria, and he expects they will field upwards of 2 million more inquiries by May 31.
One source thinks there could be as many as 15 million borrowers who default on their loans and another suggests service providers may have to absorb anywhere from $3 billion to $13 billion in loan payments to the investors who own our mortgages.
According to the Mortgage Bankers Association
, forbearance requests were surging in March. During the first full week of the month, they were up 1,270% and in the last half of March, they had skyrocketed by 1,896%.
Most people are not in trouble, at least not yet, Calibria said. For the most part, they just want to know what their options are, so try to stay patient. Phone lines and websites are likely to be jammed. The MBA says hold times have increased from two minutes to 17.5, and one in every four callers gives up. But don’t hesitate, either. Don’t be ashamed and don’t hide out hoping you will be overlooked or forgotten. You won’t, so take the first step as soon as there are signs of trouble and be honest.
If you still can’t afford your mortgage at the end of the forbearance period, the four federal agencies will try to recast your balance to make the payments more affordable. But, you need to have been current on your loan on the dates mentioned above, or no more than 30 days late at those times.
Loan modification guidelines take into account not just the interest and principal still owned on your original loan but also your property taxes, homeowners insurance, association fees and other recurring housing-related costs.
If you can’t make the grade under the rules, you will have to sell and move on. If you can’t, or won’t, do that, foreclosure is the next step.
Have a Private Lender Loan?
If your loan is with a private lender and Uncle Sam is not involved, call that lender or your loan servicer right away if you experience any financial setback because of the pandemic. Most offer some sort of relief. They don’t want to own your place any more than you want them to, but they are not legally obligated to offer any kind of forbearance,
As of late March, though, Bank of America, Chase, Citibank, U.S. Bank, Wells Fargo and a couple of hundred other banks and credit unions have announced penalty-free forbearance plans without interest for up to 90 days. Bank of America has already processed payment deferral requests for some 50,000 customers.
What to Know If You’re Renting
If you are a tenant, know than many jurisdictions have halted evictions, New York, among others, for 90 days; Florida for 45. Alabama stopped evictions and foreclosures for 30 days, but rent and mortgage payments are still due.
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act also blocks evictions. In FHA-insured single-family rental houses, the grace period is 60 days; in apartment projects backed by Fannie and Freddie loans, it’s 90 days. About one-in-four multi-family properties are financed by government loans.
Individual landlords also are bending over backwards, so check with your property manager to see if he can do anything to help.
Among other things, advisory firm RCLCO found that big-time multi-family outfits are offering flexible payment plans for those unable to make their rents, waiving late fees and offering flexible renewals with no rent hikes for 90 days. Landlord Mario Salerno, who owns 18 buildings in Brooklyn, N.Y., has cancelled rents for all of his tenants, saying he is more concerned about their health than the money.
Syndicated newspaper columnist, Lew Sichelman has been covering the housing market and all it entails for more than 50 years. He is an award-winning journalist who worked at two major Washington, D.C. newspapers and is a past president of the National Association of Real Estate Editors.
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