DC Metro, did you know: If your mortgage is federally backed, lenders are allowing forbearance for those experiencing a financial hardship caused by the coronavirus pandemic?
The CARES act, mandated by Congress, applies to homeowners all over the country, including those in the DC Metro area — from Northern Virginia, to Montgomery County Maryland, to Washington, D.C.
Curious if this applies to you? Here is what you need to know:
What is forbearance?
Forbearance is suspension of a homeowners monthly payments during a hardship. It is important to note: This is not payment forgiveness or deferment. All missed payments plus interest are due when the forbearance period ends.
Do I have to have Covid-19 to qualify?
No. You can qualify for forbearance as long as you are experiencing a hardship caused by the Covid-19 emergency — whether directly or indirectly.
According to Fannie Mae and Freddie Mac, you qualify:
“…whether you’re facing job loss, reduced income, illness or other issues that impact your ability to make your monthly mortgage payment.”
Congress intentionally left lots of room for interpretation, for both servicers and those seeking forbearance.
The Chief Executive Officer of the Mortgage Bankers Association says you should apply if:
- A hardship with a co-borrower or family member has affected someone’s ability to make payments
- You’ve lost work hours
- You’re now considered “underemployed”
Should I do it?
You should if you truly are not able to make your payments. But if you’re not affected and able to make your payments, it’s better to continue to do so.
How can I do it?
Visit your mortgage company’s website. Many of them have posted options available to their customers there.
You can, of course, also call your company directly, but be warned, call volume has gone up exponentially over the last two months. Be prepared to be put on hold.
Is there a deadline?
According to the Wall Street Journal, some servicers are taking days or weeks to respond to forbearance requests. Which means that some borrowers might not be approved until their payment date has passed. Keep in mind, there is a grace period. Now is the time to take advantage of it.
My payment date and grace period have ended and I haven’t gotten in touch with my mortgage lender. Now what?
If the forbearance plan hasn’t been approved by the last day to make that month’s payment, the loan will likely be considered delinquent.
Will this affect my credit score?
It shouldn’t, but it might.
Mortgage services have been instructed by Freddie Mac not to report “delinquent” borrowers on forbearance plans to the credit bureaus.
That said, homeowners who accept a forbearance plan should regularly check their credit reports to make sure they haven’t been reported past due.
Note: The Consumer Financial Protection Bureau said it would give lenders more time to respond to credit-reporting complaints from consumers during the pandemic. However, this also means homeowners would have to wait longer to inaccurate information removed removed from their credit reports.
Will this affect the life of my loan? What happens to interest during the time I’m not paying?
You won’t actually know how you will be allowed to catch up on the missed payments until the forbearance period has ended.
Many mortgage services allow borrowers to apply for repayment plans that spreads the missed payments over a longer period of time. Loan modification can also be an option, but both require additional paperwork and approval is not guaranteed.
Will banks foreclose on my house in the D.C. Metro area if I don’t pay my mortgage?
This answer defers from state to state. The CARES Act has put a moratorium on foreclosures to those with federally backed mortgages.
In D.C., an emergency bill passed at the beginning of April requires mortgage providers servicers to offer borrowers impacted by the pandemic payment deferral that lasts as long as 90 days. The Virginia Supreme Court has suspended non-essential, non-emergency proceedings such as evictions and foreclosures until April 6.
In Maryland and Virginia, courts have stopped hearing non-essential, non-emergency proceedings such as foreclosure or tax sale cases.
How can we help?
Here at the Estridge Group, we know these are scary times for homeowners. We’re doing the best we can to educate ourselves on your options. Please don’t hesitate to reach out if you have any questions or concerns.