Mortgage Payment Relief Efforts for Those Affected by COVID-19
Help for homeowners and tenants during the coronavirus pandemic has arrived through a variety of state and federal ordinances and programs.
President Trump on Saturday ordered the end of seizures and evictions for 60 days across the United States in response to the coronavirus pandemic that has idled millions of workers.
The Federal Housing Finance Agency (FHFA), Housing and Urban Development (HUD), United States Department of Agriculture (USDA), Fannie Mae and Freddie Mac have all announced a freeze on foreclosures and evictions for at least 60 days as well as a forbearance or disaster relief options for homeowners who cannot afford their mortgage payments.
Fannie Mae, Tolerance Freddie Mac
Freddie Mac and Fannie Mae have also said they will allow forbearance options for borrowers affected by the pandemic. Forbearance means your mortgage payments can be suspended for up to 12 months due to economic hardship caused by the coronavirus outbreak. The two agencies support about half of all mortgages in the United States
This collective move to secure housing for Americans facing financial difficulties is not only ethical but also financially wise, says Jeff Friedman, partner and shareholder of the law firm Hall Estill. If this were a typical economic downturn, there would be a chain reaction that would lead to evictions, landlords receiving less rent, lenders losing money, and foreclosures. But with officials working together on a plan that makes sense to everyone, this kind of chain reaction can be avoided.
“Here, however, the CFPB, HUD and FHFA halted this process before it began, giving tenants and financial institutions the ability to handle complaints through a dispute resolution mechanism administered by the CFPB,” Friedman said. “Plus, local sheriffs across the country are stopping enforcement of evictions and courts are refraining from taking foreclosure cases. Without it, many people would lose their apartments and buildings in the coronavirus era. The CFPB, HUD and FHFA are to be applauded for their swift and decisive action. “
Work on a streamlined national program
Quick action is possible in part because lenders are using existing programs as stopgap solutions, such as disaster relief. However, lenders and mortgage professionals do not want to rely on these long-term programs. Currently, they are working on a more streamlined assistance program that would help borrowers as COVID-19 disrupts business and ends the paychecks of millions of Americans.
Leading this effort is Ed DeMarco, president of the Housing Policy Council and former head of the FHFA.
“We know that many people have seen their incomes disrupted and, as industry leaders, we all hope that this disruption will be temporary as we fight the virus,” DeMarco said. “We want to give borrowers, regardless of loan type, access to a simple temporary payment deferral to provide assistance during this difficult time. “
The group is currently coordinating with government agencies, but DeMarco believes they can put the plan in place quickly. They are also working on a solution to help people with pending mortgage applications, as disruption in the workplace can disrupt the lending process.
Although lenders are overwhelmed with work, DeMarco urges homeowners and buyers not to give up borrowing.
“It is essential that we continue to process new mortgage applications, including refinance, in the face of the low interest rate environment, ”says DeMarco. “This in itself is an economic stimulus.”
Cities and States are mobilizing
There are cases of COVID-19 in all states of the United States, but some report higher infection rates than others. New York leads the country, with about 4,597 reported cases, according to the Centers for Disease Control and Prevention. Next come Washington and California; each has 1,187 and 652 reported cases, respectively.
This number is expected to increase, which means an increased potential for job loss and other financial burdens that may prevent some people from meeting their mortgage.
The measures put in place by government guaranteed loans and GSEs protect about 65% of mortgages in the United States, according to a recent report from the Urban Institute. The protection of owners who are not covered by these measures is left to individual jurisdictions.
List of assistance for people who cannot pay their mortgage
Here is a list of what some states are doing to help homeowners, this list will be updated as new information comes in.
New York Governor Andrew Cuomo has offered to help homeowners by announcing he will delay mortgage payments by 90 days. Eligible homeowners include those who lose their jobs due to the coronavirus.
“It’s a real benefit,” Cuomo said at a March 19 press conference. “People are under tremendous economic pressure. Making a mortgage payment can be one of the biggest stressors. Eliminating that stressor for 90 days, I think, will go a long way.”
Participation in the program will not have a negative impact on credit scores.
California Governor Gavin Newsom signed an executive order on March 16 to stop deportations and seizures for those affected by COVID-19 until May 31, unless otherwise noted.
The Texas Department of Housing and Community Affairs (TDHCA) will suspend evictions and foreclosures for residents affected by the coronavirus who are part of one of the programs supervised by the TDHCA, including: The Homebuyer Assistance Program home, the Bootstrap Loan Program, and the Homebuyer Rehabilitation Assistance Program.
“Our current practice is to take each on a case-by-case basis,” explains Kristina Tirloni, Senior Communications Advisor for TDHCA. “Forbearance, the suspension of all or part of the mortgage payment for a specified period of months, is probably the primary vehicle for mortgage assistance that will be provided to our borrowers and possibly all borrowers in need of assistance. “
Homeowners who have participated in TDHCA’s (My First Texas Home or My Choice Texas Home) Texas Homebuyer programs are encouraged to contact their mortgage lender if they are having difficulty paying their mortgage. The TDHCA does not exercise any supervision over mortgages taken out under these programs.
North Carolina is delaying all court cases (including foreclosure cases) for at least 30 days to reduce traffic in courthouses and reduce exposure to the virus.
Massachusetts is proposing legislation to stop eviction and foreclosure proceedings.
Virginia officials are urging mortgage holders and service agents to offer forbearances in hardship and to refrain from making credit reports.
Kansas is suspending foreclosures and evictions until May 1, 2020.
Louisiana ends seizures and evictions.
Maryland courts stay foreclosure and eviction actions indefinitely.
New Hampshire is indefinitely suspending foreclosures and evictions.
Pennsylvania courts are staying foreclosures and evictions until April 3.
Indiana is suspending the trigger for seizures and evictions until May 5.
New Jersey is stopping evictions and foreclosures that would not last longer than two months after the state of emergency ends (which Governor Phil Murphy put in place due to the coronavirus).
What should stressed borrowers do next
Because the new mortgage rules around the coronavirus are changing so quickly, it’s important for borrowers to communicate with their service agent about the latest options available to them, says Jennifer Keys, senior vice president of compliance at Covius.
So far, Keys says, the government has done a good job of implementing existing programs, which has helped accelerate aid. The first line of defense for homeowners is stopping foreclosure proceedings.
“I think foreclosure stops are more immediate. This gives the most immediate relief to the most urgent needs that need to be addressed, ”says Keys. “The forbearance lasts for about a year, and then after that you have a loan modification which is the next step and which modifies the loan permanently,” Keys explains.
Keep in mind that the deferred amount will need to be repaid, in most cases, so be sure to work with your lender to come up with a plan that’s right for you. People facing unemployment are likely entitled to benefits, so contact your national employment office if you need help.