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Mortgage assistance in the age of coronavirus

Before the bank takes your keys, you should know that the Coronavirus Aid, Relief, and Economic Security (CARES) Act offers two types of protection for home loans, according to the Federal Trade Commission (FTC).

These protections are for homeowners who carry federally-backed mortgages and who can prove the coronavirus crisis has directly impacted their ability to pay their notes:

  1. TEMPORARY MORATORIUM. The law calls for a 60-day suspension of all foreclosures on homes with federally-backed mortgages. The clock started March 18, per the FTC.
  2. 180-DAY RIGHT TO FORBEARANCE. If you hold a federally-backed mortgage, you can ask your servicer to either reduce or suspend your payments for 180 days. If you’re still struggling after those six months, you can request another forbearance.

Let’s be clear: a moratorium or forbearance does NOT mean you are forgiven those monthly payments. It’s a deferment. You will still be obligated to pay what you owe on your mortgage. It’s just postponed for as long as your servicer agrees to postpone it.

“First, figure out if your mortgage is federally backed,” said Carol Kando-Pineda, attorney for the FTC’s Division of Consumer & Business Education. “If you don’t know, you can call your mortgage servicer. You can get your servicer’s contact information from your billing statement.”

Since more than half of American mortgages are backed by the federal Fannie Mae or Freddie Mac, you can see if your mortgage is backed by Fannie Mae here or Freddie Mac here. You also may qualify for the federal protections if your loan is a FHA loan, USDA loan or VA loan.

Pineda said if your loan is not a federally-backed loan…

  • Contact your servicer. Tell them your situation and ask what options are available to you. Even if your mortgage is not federally backed, you may still qualify for other help.
  • Contact an approved counselor. Go to the Department of Housing and Urban Development’s (HUD) list of approved housing counseling agencies to find a counselor in your state who can explain your options. Consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE. HPF is a nonprofit organization that partners with mortgage companies, local governments and other organizations to help consumers get loan modifications and prevent foreclosures. In Memphis, you can contact the Community Legal Center of Memphis at (901) 543-3395.
  • Check what help is available where you live. Your state may offer additional support. Some states have frozen foreclosures. Find your state government’s website and look around for the latest updates on help for borrowers.
  • REMEMBER: Scammers follow the headlines. It’s tempting to hire a company that says they can get a change to your loan that will reduce your monthly mortgage payment or take other steps to save your home. Unfortunately, many companies use half-truths and even outright lies to sell their services, or they make promises but don’t deliver.
  • NEVER pay up-front for help. Federal law says even if you hire someone to help you with your mortgage, you don’t have to pay them until they deliver the results you want. It’s illegal for a company to charge you a penny until you’ve accepted their written offer for a loan modification or other relief from your lender, and you’re free to reject an offer you don’t like. Even if you hire someone, you should always feel free to contact your mortgage servicer directly to see whether they can offer you additional options.

Copyright 2020 Wise Choices TM. All rights reserved.

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