The outbreak of the novel coronavirus has left many people dealing with reduced income or unemployment. In March 2020, the federal government enacted the CARES Act to offer economic relief to those affected. The government included in the CARES Act directives to mortgage lenders aimed at providing mortgage relief options to homeowners struggling with coronavirus-related financial hardship. The majority of homeowners are eligible for some kind of relief under these terms; one such method is mortgage forbearance. Read on for more information about forbearance in the time of COVID-19.
According to the Consumer Financial Protection Bureau, forbearance refers to “when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage.” Since March 2020, millions of homeowners across the nation have received mortgage forbearance under the CARES Act to reduce or temporarily pause their mortgage payments.
A mortgage forbearance under the CARES Act has some differences from those in more usual times. For instance, while forbearance usually lasts about 90 days, longer periods have been made available to scores of homeowners who have been impacted by COVID-19. The CARES Act requires lenders to offer forbearance periods of up to 180 days, with the option for borrowers to request an additional 180 days; and lenders also must allow borrowers to halt a forbearance at any time. Borrowers must go through an application process to receive a mortgage forbearance; there is a specific window of time to apply. However, many lenders have shifted deadlines due to the pandemic. Furthermore, if you are currently in forbearance and need to extend your term, you should be able to do so without difficulty.
If you receive a mortgage forbearance, you might be concerned about its impact on your overall credit as lenders typically report things like late or missed payments to the credit bureaus. Most likely, you don’t need to worry because most lenders won’t report delayed payments from forbearance received under the terms of the CARES Act. Check your credit report regularly from all three credit bureaus (which can be done weekly for free through April 2021 under the terms of the CARES Act). Make sure your lender is reporting your mortgage correctly, as forbearance or “paying as agreed,” but not as late payments. If your forbearance is reported to the credit bureaus incorrectly, you should be able to dispute it with the credit bureau(s) after the fact since it is part of a COVID-19 mortgage relief plan.
No matter what type of mortgage loan you have and no matter what government assistance may be available, contacting your lender (not other organizations offering mortgage relief, which could be scammers) is key if you are unable to make your mortgage payments during this pandemic. If you are unsure of how to initiate this contact with your lender in the Dallas-Fort Worth Metroplex or surrounding suburbs, the professionals at WEICHERT, REALTORS® – The Harrell Group can help guide you. Consulting the knowledgeable real estate experts of the Harrell Group is a good first step to take as you consider mortgage options for a property; the experienced real estate team offers exceptional guidance and support to every client. Contact WEICHERT, REALTORS® – The Harrell Group to speak to a licensed real estate professional about your needs.
Written by: Erika Mehlhaff