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The 3 Steps You Need to Take if You Can’t Pay Your Mortgage During COVID-19

By Tanya Svoboda
April 2020

COVID-19 has taken a lot from us; our freedom to move about as we please, our daily routines, and for many Americans it has taken our jobs. According to the Bureau of Labor Statistics, the US unemployment rate rose to 4.4% in March from 3.5% in February. Many homeowners are encountering financial hardship due to lost jobs or decreased wages and are unable to make their mortgage payments.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on Friday, March 27, 2020 by President Trump. It offers foreclosure moratoriums and mortgage forbearance, for homeowners who are experiencing financial hardship. If you find that you aren’t able to make your mortgage payment or if you fear you may not be able to make it in the future, here are the first three steps you should take.

1. Call Your Loan Provider

You don’t have to wait until you’ve missed a payment to ask for assistance. Generally, you’ll have more choices the earlier you ask. Your lender will have some questions for you when you call. Be prepared with the following information:

  • Your loan’s account number.
  • A statement explaining why you are unable to make your payment.
  • An idea of how long you anticipate not being able to make your payments (temporarily or permanently).
  • Details about your income, expenses and other assets, like cash in the bank.
2. Determine if Your Loan is Government Backed

Protections under the CARES Act are available to homeowners with federally backed mortgages who have encountered pandemic-related financial hardship. The Consumer Financial Protection Bureau states mortgages backed by the following federal agencies will qualify:

3. Determine Your Repayment Options

It is important to remember that you will have to repay the forbearance amount including interest. How you repay that amount varies between lenders. Government-backed loans have different options than loans that are privately owned.

Government-backed forbearance repayment options:

  • Lump-sum: Repay the entire amount you owe at one time.
  • Short term repayment: Repay the entire amount you owe divided evenly over six months.
  • Extended loan modification: Tack the forbearance amount onto the end of your loan which will increase the loan’s length and change its terms.

Privately owned forbearance repayment options:

The CARES Act does not cover privately-owned mortgages, but many private lenders are taking steps to help. Natalie Campisi, senior mortgage reporter at Bank Rate says, “most lenders are motivated to offer consumers repayment options that they can afford. Some lenders, like Bank of America, are automatically tacking the amount owed to the back of the loan.”

These are uncertain times for homeowners all across America. The CARES Act, and frank conversations with your lender, can help you get a handle on what your options are and alleviate any concerns you may have about losing your home due to financial hardship caused by COVID-19.


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