Coronavirus Mortgage Relief: What Homeowners Need to Know

The Coronavirus Aid, Relief and Economic Security Act—also known as the CARES Act—is a $2 trillion stimulus package passed by the federal government. The goal of the CARES Act is to provide relief for individuals and businesses struggling with the financial fallout of the COVID-19 pandemic and resulting shutdowns. One of the components of the CARES Act is coronavirus mortgage relief.

This mortgage relief provides some options for homeowners, with federally backed mortgages, who can’t keep up with mortgage payments. The CARES Act also provides some relief for renters. Here’s a breakdown of some of the relief options available under the coronavirus mortgage stimulus.

Who Is Covered by Federal Coronavirus Mortgage Relief?

The mandates under the CARES Act only cover mortgages that are federally backed. Federally backed loans are those that are guaranteed, insured or made by the Department of Veteran’s Affairs or the Department of Agriculture or meet one of the following other requirements:

• They’re insured by the Federal Housing Administration or under the National Housing Act.
• They have been purchased or secured by either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.
• They’re guaranteed by the Housing and Community Development Act of 1992.

If you’re not sure if your mortgage is federally backed, call your mortgage lender to find out. With around 65% of mortgages protected by the new mandates, there’s a good chance yours is one of them.

Are People Without Federally Backed Mortgages Out of Luck?

The coronavirus mortgage stimulus mandated by the CARES Act doesn’t cover mortgages that aren’t backed by the federal government. But that doesn’t mean your mortgage company won’t offer some relief.

States are also enacting relief plans, and many include working with mortgage providers to provide some relief for homeowners. And many mortgage companies already have contingencies for working with people who are struggling with mortgage debt. You may be able to apply for relief that lets you skip a few months of payments or restructure your mortgage to make it more affordable. Contact your mortgage provider to see what is available for your situation.

Another option to consider is refinancing your mortgage to get potentially better rates. That can drop the total monthly mortgage payment.

What Should You Do If You Can’t Pay Your Mortgage Because of COVID-19?

The Consumer Financial Protection Bureau notes that it’s important to continue paying your bills, including your mortgage, if you can. If you’re struggling to make those payments because of income loss due to COVID-19, however, you should contact your lender as soon as possible. Waiting to deal with the problem can result in late payments, extra fees and negative items on your credit report.

What Mortgage Relief Is Offered Under the CARES Act?

The CARES Act provides two protections to help homeowners who are dealing with financial distress because of the coronavirus and related economic issues. The first is a foreclosure moratorium. That means that lenders of these loans cannot take action on foreclosures or begin new ones for at least 60 days from the time the act was signed in March 2020. This protection is also only available for federally guaranteed loans.

The CARES Act also provides a right to forbearance for covered mortgage holders. Forbearance is the option to stop making scheduled payments on a loan without incurring negative consequences. In this case, the payments would likely be added to the end of the loan, so you would simply pay them later.

You can request a forbearance of 180 days. You can also request a second forbearance of 180 days if you are still experiencing COVID-19-related financial distress. That’s up to 12 months of mortgage payment relief for those who qualify.

How Do You Get Coronavirus Mortgage Relief?

Start by calling your mortgage service provider and explaining your situation. Whether or not your mortgage is federally backed, this is the first step.

Be prepared to be on hold for a while. Many other people are attempting to access the same help, so you could wait for a while to speak to a customer service representative. You should also be prepared with the following information:

• The reason you can’t pay your mortgage as scheduled
• How long you may be in this situation
• Your current income and expenses
• Information about current assets, such as how much you have in the bank

Ask what options you have for mortgage relief. Then, follow any instructions provided by your lender for how to apply for the relief.

What Relief Do Renters Have Under the CARES Act?

The CARES Act also provides some relief for renters. For 120 days from March 27, 2020, landlords of certain types of properties can’t begin eviction procedures or charge fees because someone hasn’t paid their rent. The mandate covers all federally financed rental units. That accounts for around 28% of all rental properties in the nation.

Again, you should continue to pay your rent if you can. If you can’t, talk to your landlord immediately to find out what arrangements might be possible. But know that if you’re in a federally financed property, you can’t be evicted during this time.

Other Coronavirus Rent Relief Options

You may be able to create a partial payment plan with your landlord. If your landlord can’t or won’t work with you, reach out to your bank to find out about emergency COVID-19 loans. Many are offering short-term loans of up to $3,000 to provide financial relief to those impacted by the pandemic.

What Should You Do After You Receive Coronavirus Mortgage Relief or Work Out a Deal With Your Landlord?

Get any relief deal in writing. If there are errors or misunderstandings about it in the future, you can refer to the document.

If you get mortgage relief, still read your mortgage statement every month. That will help you see that the mortgage company is upholding their end of the agreement.

Whatever relief you get, consider monitoring your credit. That way you know if anyone has incorrectly reported a missing or late payment on your credit report. You can challenge the accuracy of a new negative item—which can cause your credit to be lower and impact the financial options you have in the future.

Consider signing up for your free Credit Report Card. You get your credit score and personalized recommendations on how to improve your score in the future.