Did The Government Suspend My Mortgage Payment As Part Of Coronavirus Relief?

Mortgage Bailout coronavirus

Are you having trouble making your mortgage payment? There are many headlines about economic relief associated with the coronavirus pandemic and COVID-19. Some of those headlines discuss economic stimulus proposals and legislation such as the CARES Act of 2020, and the three phases of economic stimulus proposed by the House and Senate. But what do homeowners need to know about the coronavirus, economic stimulus, and their mortgages?

If You Have Not Spoken To Your Loan Servicer, You Still Owe Mortgage Payments Each Month

No matter what you read or who you speak to, if you have not spoken to your loan servicer or loan officer to make arrangements about monthly mortgage payments, you still owe your monthly mortgage payment as usual.

There are headlines about an effort by the mortgage industry to get a federal bailout for homeowners that could potentially delay mortgage payment deadlines for those affected by the coronavirus. The plan is meant to address economic woes for homeowners which may include outbreak-related loss of employment such as furloughs and layoffs.

The idea is that three or more payments could be shuffled to the end of the original loan term, giving those who owe mortgage payments some breathing room while trying to recover from economic losses.

This plan has NOT been approved or even taken up by Congress at press time; it is, however, a good example of the type of headlines that are out there that could lead some to mistakenly assume they do not owe monthly house payments right now.

This is NOT TRUE. You must contact your lender to learn what options are open to you.

Foreclosure Moratoriums: Not The Same As Mortgage Payment Forbearance

A foreclosure moratorium such as the one issued by the FHA and HUD suspends any foreclosure action against a borrower who has an FHA mortgage. There are many such programs in place for a wide range of loans that temporarily delay the legal action associated with foreclosures.

Loan forbearance is different. This is a procedure where the borrower and lender work together to establish a way to get a mortgage back on track after a late or missed payment or payments. Forbearance has to do with catching up on the mortgage.

As mentioned above, many government-backed mortgages (as well as conventional mortgages) have updated, temporary guidelines instructing lenders not to initiate foreclosure action (including evictions) for sixty days during the coronavirus crisis. But a foreclosure moratorium is ONLY a delay of the action, it is NOT a pass or permission to skip mortgage payments.

Some borrowers may assume that the moratorium implies automatic lender approval of skipped or missed payments.

But loan modification, refinance, delayed payments, and other arrangements that can help you avoid loan default or foreclosure are NOT AUTOMATIC and you are required to contact your loan servicer as well as make arrangements with the loan officer for ANY deviation from your legally binding loan contract.

Loan modification, loan forbearance, and refinance options are all on the table for those who act quickly, but for those who miss more than one mortgage payment, options quickly become limited. The bottom line? The more payments you miss, the fewer your options are for avoiding foreclosure.

Contact your creditors IMMEDIATELY when you know you will have trouble making payments. This is sound advice not only for mortgage loans but for any line of credit. If you do not make arrangements, your credit scores can be affected as well as your ability to qualify for future credit.