Homeowners Payment Relief Program

Posted by Josie Bumgamer on December 3rd, 2020

In light of the recent economic situation with the COVID-19 pandemic, a lot of homeowners are wondering where to turn in times of hardship.  Homeowner relief programs are available depending on your bank; we recommend you check in with your mortgage lender to see what options they are offering.  This guide is meant to serve you as a starting point before connecting with your provider.

Homeowners payment relief programs are made for individuals who experienced a reduction in their income or who have been faced with full on unemployment.  These programs for homeowners are part of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, where the federal government has partly directed mortgage lenders to provide relief to affected homeowners.  While local governments are individually deciding the best way to help renters who were affected, being a homeowner has enabled homeowners to be doubly protected since in addition to federal government homeowners payment relief programs, some local state officials are rolling out programs as well. 

Let’s look at the federal options and where to start:

The first step is to verify your mortgage type.  Knowing this will determine which type of assistance is available to you.  The types of loans eligible for payment relief under the CARES Act are:

-          Conventional loans: GSEs, Fannie Mae, or Freddie Mac

-          FHA loans: Federal Housing Administration

-          VA loans: Department of Veterans Affairs

-          USDA loans: Department of Agriculture

Conventional loans owned by Freddie Mac or Fannie Mae have a search feature on their site which you can use to find out whether your loan is owned by them.  For FHA, VA, or USDA loans you can look on your closing documents; find your Closing Disclosure and on the upper right of the first page there are checkboxes which will indicate what kind of loan you have.  Your mortgage lender will be able to give you this information as well.  Here is a breakdown of the programs available for each loan type:

-          Freddie Mac: borrowers can set their loans for up to 12 months of forbearance, which will not be reported to credit bureaus

-          Fannie Mae: borrowers can set their loans for up to 12 months of reduced or suspended payments, which will not be reported to credit bureaus

-          FHA: not only is are these loans offering forbearance under the CARES Act, but there are always different mortgage relief programs in place such as standard mortgage forbearance lasting up to six months and special forbearance for unemployment (which can last a year or more)

-          VA: in addition to the CARES Act, VA lenders were encouraged to use their other preexisting homeowner payment relief programs including special forbearance which varies in duration based on the borrower’s situation

Though there will be no late payment fees, penalties, or interest during the 180 day CARES Act forbearance requirement with the option to request another 180 days, it is important to note that forbearance does not mean forgiveness.  What this means is that the payments will still be due at the end of the forbearance period for the homeowner payment relief program.  That being said, we recommend you get a full and thorough understanding of what the payback terms are when speaking to your lender.  Your regular interest will still accrue and therefore, once the forbearance period is over the payments you have missed will be due.  If you do not feel comfortable with the terms, it is best to ask your mortgage lender as many questions before making a decision on any loan modifications. We recommend calling before you miss a payment as this will likely give you more options for the homeowner relief program. Before you contact your provider, make sure you have:

-          Estimated your current and future income to see what you can afford

-          A good estimate of your monthly expenses

-          Your most recent mortgage statement

-          Supporting documents of what caused your financial situation to change      

Being a homeowner in times like this highlights the importance of owning a home as homeowner payment relief programs are federal and therefore provide a further security net.  We wish everyone the best of luck and strength during this time.  If you have any tips on how you’re navigating through tough times, share your experience with the CARES Act mortgage relief program below!