COVID-19 Mortgage Payment FAQs
Here is an important message from the Consumer Protection Financial Bureau.
We want to share information with you about making your mortgage payments if you have experienced a loss of income or other financial hardship due to COVID-19.
Your health and the health of the people you love is the most important thing right now. The Centers for Disease Control has the latest news and advice regarding COVID-19 and how to protect yourself. They update the page often so be sure you are checking in regularly.
If you can make your mortgage payment, you should do so.
Q: Will a forbearance make it harder for me to refinance or buy a new home?
A: Even though your credit report may not have any negative credit information, the investor your loan may not be willing to extend another loan to you. This can be problematic for many borrowers who have loans with Fannie Mae, Freddie Mac, FHA, VA or USDA. Also, if you are still repaying a forbearance at the time you want to refinance, the past due amounts may prevent you from qualifying for a refinance.
Q: Is it true that taking a loan modification later can make it harder for me to refinance?
A: If you modify your loan in order to repay the amount due from the forbearance period, the loan modification can make it harder for qualify for the best available terms in the event you want to finance later.
Q: What if I can’t make my mortgage payment due to loss of income?
A: You may be able to obtain short-term relief if COVID-19 has caused a financial hardship (such as loss of income due to layoff, furlough, termination of employment, reduction in hours or inability to work due to caring for yourself or a family member who is ill with COVID-19). This relief is called forbearance.
Q: What is forbearance?
A: With forbearance, you will be able to pause your mortgage payments for up to 6 months. If you cannot make payments when the initial period ends, you can extend the forbearance for another 6 months for a total of 12 months of forbearance.
Q: How will forbearance help me?
A: Forbearance can help you through the pandemic, but any missed payments will have to be repaid. Your servicer will work you to find a payment solution that works for you when the forbearance period ends.
Q: My loan is
for a second home or 1-4 family investment property, can I obtain forbearance?
A: Yes, if the loan is with Fannie Mae, Freddie Mac, FHA, VA or USDA. If you take a forbearance on rental property, be sure you understand your obligations as a landlord under the CARES Act as well as state and local requirements and emergency orders where the property is located. If your loan is with a bank or other private investor, you will need to contact your servicer to find out what options are available to you for second homes and rental properties.
Q: What happens when forbearance ends?
A: When the forbearance period is over, all payments that were not made must be paid back. There are a few options to repay the paused payments:
- Repayment plan – the amount due will be divided over a set number of months. That amount will be added to you regular mortgage payment
- Lump Sum – the simplest method is to repay the full amount owed at one time
- Loan modification – if you are not able to make a lump sum payment or repay over time, you will need to apply for a loan modification. The servicer will review your income and offer loan restricting options such as extending the months you owe, lowering the interest rate or other alternatives to provide a payment you can afford.
Q: Will the payment suspension change my mortgage insurance?
A: While every situation is different, a period of forbearance will most likely increase the length of time you will be required to pay for private mortgage insurance or a mortgage insurance premium.
Q: How will forbearance affect my escrow account? Will taxes and insurance still be paid by the servicer?
A: If your mortgage payment includes escrows for taxes and insurance, the servicer will continue to pay the property taxes and insurance premiums as they become due. However, since you are not making monthly payments during forbearance, your escrow account will have a shortage when the annual analysis occurs. You will have to repay that escrow shortage. Talk to your servicer about repayment options to repay an escrow shortage.
Q: Will taking a forbearance harm my credit?
A: If you qualify for a forbearance under the CARES Act, the servicer cannot enter any negative credit reporting on you. However, be aware that credit reporting errors can happen and you should continue to closely monitor your credit report to ensure accurate reporting. The CARES Act forbearance requirements only applies to loans with Fannie Mae, Freddie Mac, FHA, VA and USDA. If your loan is with a private bank, for example, you will need to ask how they will handle credit reporting during the forbearance period.
Q: How do I know who my servicer is?
A: Your mortgage servicer is the company that you send your mortgage payments to each month. If you don’t know or can’t remember who currently services your mortgage, there are several ways to find out, including looking at your mortgage statement for contact information. Click here to find out who owns or services your mortgage.
Q: What questions should I ask my servicer?
A: Ask your servicer what options are available to temporarily reduce or pause mortgage payments. Ask whether there are forbearance, loan modification or other options. Find out if late fees can be waived.
Q: Should I have something in writing from my servicer?
A: Yes, ask you servicer to send a written confirmation of the arrangements you agreed to. Be sure the terms are clear and you understand how long the forbearance will last and what you need to do when the period ends.
Q: What if I can’t reach anyone on the phone at my servicer?
A: Your servicer is likely experiencing long hold times on the phone. If there is online account available to you, check there to see if you can apply for forbearance due to COVID-19.
Q: Where can I find more information about forbearance and my mortgage payments related to COVID-19?
A: The Consumer Financial Protection Bureau has posted a Guide to coronavirus mortgage relief options.
Q: Where can I find help to talk about my payment options?
A: For help in exploring your options, reach out to a housing counselor. Use the CFPB’s “Find a Counselor” tool to get a list of counseling agencies approved by the Department of Housing and Urban Development (HUD). You can also call the HOPE™ Hotline, open 24 hours a day, seven days a week, at (888) 995-HOPE (4673).
Q: Should I pay someone to help me apply for forbearance?
A: Absolutely not. There is NO COST to obtain a forbearance from your loan servicer. Look out for scams. Times like this often lead to criminals finding a way to take advantage of people who need help. They may impersonate companies, charities, or government agencies. Never pay anyone a fee to help you request a forbearance or work on a loan modification. Watch out for suspicious emails, phone calls and text messages offering to help you. Never share your account information such as username and password with anyone.