The coronavirus and consequent disease of COVID-19 became a pandemic, causing millions of people to have reduced work hours or lose their jobs completely. As a result, many have been unable to pay their home mortgages. In March 2020, in response to the pandemic, the federal government enacted the CARES Act to offer economic relief to those affected. The CARES Act includes directives to mortgage lenders to provide mortgage relief options to homeowners struggling with mortgage payments due to pandemic-related financial hardship. Most homeowners are eligible for some kind of relief under the CARES Act, including mortgage forbearance. Here is more information about forbearance in the COVID times.
Mortgage forbearance is “when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage,” states the Consumer Financial Protection Bureau (CFPB). Since the start of the pandemic, millions of homeowners have received mortgage forbearance under the CARES Act, reducing or temporarily pausing their payments as they attempt to recover from financial losses.
The CARES Act allows for mortgage forbearances which differ to some degree from forbearance outside of the pandemic. One difference is that a forbearance period usually lasts about 90 days, but longer periods have been made available to homeowners impacted by COVID-19. The CARES Act requires lenders to offer 180 days of forbearance with the option of adding another 180 days if needed; they also must stop a forbearance without penalty if requested by the homeowner. There is an application process for eligible homeowners to receive a mortgage forbearance (though many lenders have shifted deadlines right now). Also important to note is that if a homeowner is currently in forbearance and needs to extend it, it is possible to do so.
Because lenders report late or missed payments to the credit bureaus, many who are seeking pandemic-related mortgage forbearance under the CARES Act wonder if their credit will be negatively impacted. Most lenders will not report delayed payments from mortgage forbearance received under these terms, so there is likely no need for concern. However, you should check your credit report (from all three major credit bureaus) to make sure your lender reports your mortgage correctly as forbearance or “paying as agreed.” If your situation is reported incorrectly, you should be able to dispute it with the credit bureaus by clarifying that your mortgage forbearance was granted in as COVID-19 mortgage relief.
No matter what type of mortgage loan you have, homeowners who are struggling do have mortgage relief options. If you need information or guidance regarding contacting your lender in the Texas Gulf Coast area, the real estate specialists at WEICHERT, REALTORS® – The Place of Houses can help. Seeking advice from this team of real estate experts is helpful as you consider your mortgage options in general; they offer exceptional support to all their clients. Contact WEICHERT, REALTORS® – The Place of Houses to speak to a licensed real estate professional about your needs.