Housing Market UpdatesLendingSeller Tips April 13, 2020

Mortgage Forbearance: What You Need to Know

A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts in place two protections for homeowners with federally backed mortgages:

  1. First, your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and loan servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
  2. Second, if you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. (Governor Newson announced on March 25th that financial institutions will offer mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19.) You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account.

Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time.

Nearly half of the nation’s mortgages are owned or backed by Fannie Mae or Freddie Mac. The other agencies are the US Department of Veterans Affairs (VA), Federal Housing Administration (FHA), the US Department of Housing and Urban Development (HUD) and the US Department of Agriculture.

You can check if your loan is backed by these agencies by going to these links:

Fannie Mae Loan Look Up

Freddie Mac Loan Look Up

Fannie and Freddie released essentially identical sets of guidelines for borrowers and lenders about single-family mortgages:

  • Homeowners “adversely impacted by this emergency,” in the words of Fannie Mae, “may request mortgage assistance by contacting their mortgage servicer.”
  • Mortgage forbearance provided to reduce or suspend payments for up to 12 months.
  • Foreclosure sales and evictions suspended for 60 days—Freddie Mac lists the date as “at least May 17, 2020.”
  • Lenders must suspend reports to credit bureaus of past-due payments for borrowers in a forbearance plan
  • No penalties or late fees for homeowners in a forbearance plan
  • After forbearance, lender is mandated to “work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification,” states Fannie Mae.

The California Department of Business Oversight page has compiled contact information for national banks, state-chartered banks, credit unions, and mortgage lenders and servicer providers who have agreed to provide the mortgage and fee relief announced by Governor Gavin Newsom on March 25.

Look up your Lender or Loan Services contact information HERE

The main thing to remember is that forbearance is not forgiveness. You still owe the money that you were paying, it’s just that there’s a temporary pause on making your monthly payments.  If your income is restored, reach out to your servicer and resume making payments as soon as you can.

Find out about other financial reliefs available during this COVID-19 pandemic at our COVID-19 Resource Page