Help for Homeowners During the COVID Crisis

Legal update: COVID-19 forbearances are no longer available. But you might qualify for another option that will help you avoid a foreclosure, like a regular forbearance, loan modification, or repayment plan. Your options depend on what entity owns or guarantees your mortgage loan, such as FHA, VA, or Fannie Mae or Freddie Mac. Also, note that the VA has asked servicers to halt foreclosures through December 31, 2024, for veterans with VA loans.

Relief might be available if you've fallen behind on mortgage payments or think you soon will due to the COVID-19 pandemic. You can ask for a forbearance, which provides temporary payment relief, or apply for a more permanent loss mitigation option, like a loan modification.

COVID-19 Forbearances for Federally Backed Mortgage Loans

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, homeowners with a federally backed mortgage loan, regardless of delinquency status, who're experiencing a financial hardship due directly or indirectly to COVID-19, can get a forbearance. This kind of forbearance is sometimes called a "COVID-19 forbearance" or "CARES Act forbearance."

Again, the right to get a forbearance applies to federally-backed mortgage loans. Basically, a "federally backed mortgage loan" is:

• insured by the Federal Housing Administration (FHA)
• guaranteed or insured by the Department of Veterans Affairs (VA)
• guaranteed, insured, or made by the Department of Agriculture (USDA), or
• purchased or securitized by Fannie Mae or Freddie Mac.

If you're unsure whether your loan is federally backed, you can get that information from your servicer.

The forbearance period will generally last as long as 180 days (six months). Depending on the circumstances, you might be able to extend the forbearance period.

To get the forbearance, you need to make a request to your loan servicer and affirm that you've suffered a financial hardship due to the COVID-19 emergency; the servicer can't require any additional documentation beyond your attestation.

Deadline to Get a Forbearance for Fannie Mae and Freddie Mac Loans

Fannie Mae and Freddie Mac haven't issued any guidance giving a deadline to request an initial forbearance. Most likely, you may request an initial COVID-19 forbearance while the COVID-19 national emergency declaration is still in place. The declaration expires on May 11, 2023.

Even after COVID-19 forbearances are no longer available, Fannie Mae and Freddie Mac offer six-month forbearances (and up to six additional months of forbearance in some cases) to borrowers with these kinds of loans who meet eligibility requirements.

Forbearance Extensions for Fannie Mae- and Freddie Mac-Backed Loans

The FHFA announced that borrowers with Fannie Mae and Freddie Mac-backed loans could extend their COVID-19 forbearances for another three months after the initial 180-day forbearance and 180-day extension expire. To get the forbearance extension, borrowers must have a COVID-19 forbearance plan in place on or before February 28, 2021, and other limits might apply.

In addition, a COVID-19 payment deferral can cover missed payments. With a deferral, borrowers repay the skipped payments when the home is sold, refinanced, or at mortgage maturity.

Deadline to Get a Forbearance for FHA-Insured Loans, VA-Guaranteed Loans, and USDA Loans

FHA said you must request an initial COVID-19 forbearance from your mortgage servicer by May 31, 2023, and that no COVID-19 forbearance period may extend beyond November 30, 2023.

The VA has stated that COVID-19 forbearances are available through the end of the nationally declared emergency. If you make an initial request for a COVID-19 forbearance during this time, VA expects your mortgage company to approve your request for up to six months. VA also expects your mortgage company to approve an additional COVID-19 forbearance for up to six months if you request it.

The USDA announced that if your loan is USDA direct loan, you may request an initial COVID-19 forbearance until the COVID-19 national emergency ends.

Forbearance Extensions for FHA-Insured Loans

For FHA-insured loans, if the initial forbearance date is March 1, 2020 to June 30, 2020, you can get two six-month forbearances and two additional three-month forbearances. If the initial forbearance date is July 1, 2020 to September 30, 2020, you can get a three-month extension after the initial two 180-day periods. If the initial forbearance date is October 1, 2020 to June 30, 2021, you can only get two six-month forbearance periods. And you can get a six-month forbearance and six-month extension if your initial request is made between July 1, 2021, and September 30, 2021.

If you request an initial 180-day forbearance on or after October 1, 2021, you can get an additional six months if the forbearance is exhausted and expires before the end of the COVID-19 national emergency on May 11, 2023.

Again, you must request an initial COVID-19 forbearance from your mortgage servicer by May 31, 2023, and a COVID-19 forbearance period can't last beyond November 30, 2023.

Forbearance Extensions for VA-Guaranteed Loans

The VA website says that borrowers with VA-guaranteed loans can get up to six months of additional mortgage-payment forbearance in three-month increments if they entered a forbearance on or before June 30, 2020.

Forbearance Extensions for USDA Loans

USDA announced that borrowers who received an initial CARES Act forbearance may be granted up to two additional three-month payment forbearances. The borrower must request each extension individually. (The initial forbearance period may be up to 180 days, and the borrower may request an extension of up to an additional 180 days.)

Forbearance Isn't the Same as Forgiveness

It's important to note that a forbearance isn't the same as forgiveness. After the forbearance period ends, you'll still owe the amounts you skipped paying. So, it's probably not a good idea to request a forbearance if you can afford to make your payments.

Usually, after a forbearance, you can pay the skipped amounts:

• in a lump sum
• with a repayment plan
• in a payment deferral program (the lender defers repayment of the entire forbearance amount, usually until you sell the home, refinance the property, or the loan matures), or
• through a modification in which the lender adds the unpaid amounts to the loan balance. (If you apply for a modification, you'll most likely have to provide supporting documentation, like copies of your bank statements and tax returns, at that time.)

Your options depend on what entity, like FHA, VA, USDA, Fannie Mae, or Freddie Mac, owns or guarantees your loan, and you probably have alternatives. Under official loan servicing guidelines, the servicer can't require you to get caught up with a lump sum if you can't afford it and you have an FHA, VA, USDA, Fannie Mae, or Freddie Mac loan.

Learn about your rights before you request a forbearance so you'll know if your servicer is giving you bad information. Be sure to document any agreement you make with the servicer. Ask your servicer to provide written documentation that confirms the details of what you've discussed.

You can also take screenshots or extensive notes about a phone call. Keep track of when you called and whom you spoke to. Save emails and other communications you receive. Again, if you need help enforcing your rights, consider hiring a foreclosure lawyer to help you.

The CARES Act Prohibits Fees, Penalties, and Additional Interest

During the forbearance period, the servicer can't charge fees, penalties, or interest beyond the amounts scheduled or calculated as if you made all contractual payments on time and in full under the terms of the mortgage contract.

The CARES Act Prohibits Negative Credit Reporting

Under the CARES Act, if you make an agreement with your servicer (or another creditor) to defer one or more payments, make a partial payment, forbear any delinquent amounts, modify a loan or contract, or get any other assistance or relief—called an "accommodation" under the law—because you were affected by COVID-19, the servicer has to report the account as current to the credit reporting agencies if you weren't already delinquent.

This protection is available beginning January 31, 2020, and ends 120 days after enactment or 120 days after the national emergency declaration for the coronavirus is terminated, whichever occurs later.

But you have to come to an agreement with the servicer first to avoid adverse reporting, and you have to stick to the terms of the agreement. Don't unilaterally stop making your payments, delay your payments, or short them.

And, if you were already delinquent at the time of the agreement, the servicer can keep reporting the delinquent status unless you bring the account current. In the case of a charge-off, the creditor may continue to report it as a charge-off.

Some Servicers Are Reporting Mortgages in Forbearance as Current But Adding a Comment

Other Kinds of Loans

Even if your loan isn't federally backed, your servicer might offer you a forbearance or another form of relief, like a waiver of late fees or a loan modification. Also, your state might provide special protections or programs for mortgage borrowers.

Contact your loan servicer, talk to a lawyer, or speak to a HUD-approved housing counselor to determine your options. You can also check your state government's website for available mortgage assistance. The law prohibiting adverse credit reporting applies if you can work something out with the servicer.

Call your loan servicer to learn more. Also, a HUD-approved housing counselor can explain these options in more detail and help you if you're having trouble getting information from your mortgage servicer. Go to hud.gov to find a housing counseling agency near you, or call toll-free 800-569-4287.

Other Available Mortgage Help

Other mortgage help is available, too.

• Additional protections against foreclosure under federal law. The Consumer Financial Protection Bureau (CFPB) finalized a rule, effective until January 1, 2022, making it mandatory for loan servicers to enhance their efforts to help homeowners affected by the COVID-19 pandemic. The rule ensures that borrowers get a meaningful chance to pursue loss mitigation options to avoid foreclosure and allows servicers to offer assistance to borrowers faster.
• State protections against foreclosure. A couple of states, including Connecticut and New Mexico, have passed new foreclosure laws to help homeowners avoid foreclosure. Other states have foreclosure protection laws already in place. (Learn about the foreclosure laws in your state.)

Mortgage Payment Relief for the Long Term

If you need a more permanent solution, say after a forbearance period ends, you may apply for a loan modification or another option. Fannie Mae and Freddie Mac offer eligible homeowners modifications, often after a forbearance. Homeowners with FHA-insured loans can access FHA's suite of loss mitigation options. VA-backed loans can be modified as well. Most banks and mortgage lenders offer in-house ("proprietary") modifications if you have another type of loan.

Under federal law, the servicer generally doesn't have to review more than one loss mitigation application from you unless you bring the loan current after applying. But considering what's happening with COVID-19, even if you already applied, it's worth contacting the servicer again to find out if help is available. If your loan is owned or insured by Fannie Mae, Freddie Mac, FHA, VA, or the Rural Housing Service, you can contact that entity, too, to find out about mortgage-payment relief.

Getting Help With Your Mortgage During the COVID-19 Pandemic

Contact your loan servicer for specific information about what kind of relief is available in your circumstances.

A local foreclosure lawyer can advise you about your legal rights under federal mortgage servicing laws and tell you about state laws that could protect you.

A HUD-approved housing counselor can provide you with helpful information (at no cost) about different loss mitigation options.