The U.S. battle with the coronavirus has left some Americans struggling to pay their bills, including mortgage payments. As state and local governments continue to order business closures, lockdowns and curfews, out-of-work homeowners are wondering how they’ll afford housing costs.
Some workers are more vulnerable than others, including roughly 15 million Americans who work in hospitality and leisure, a sector that has been virtually shut down as the coronavirus continues to spread.
Across the country, moratoriums are in place to stop evictions in an effort to lessen the financial burden created by COVID-19. On Monday, the governor of California, Gavin Newsom, authorized local governments to stop any foreclosures through Sunday, March 31, for both homeowners and renters.
“People shouldn’t lose or be forced out of their home because of the spread of COVID-19,” said Newsom, in a statement. “Over the next few weeks, everyone will have to make sacrifices – but a place to live shouldn’t be one of them. I strongly encourage cities and counties to take up this authority to protect Californians.”
Fortunately, lenders are proactively offering to help borrowers in trouble by providing hardship forbearance options. Additionally, cities and states have taken measures to halt evictions and foreclosures. President Trump added to the relief efforts by directing the Department of Housing and Urban Development (HUD) to suspend all foreclosure and eviction activity until further notice; however, details are not known yet.
What steps mortgage borrowers should take
During this stressful time, keep in mind mortgage servicers would rather work with existing customers (even if they can’t currently make payments) than start collection or foreclosure proceedings. Here are steps you should take if you can’t afford your home loan payments.
1. Talk to your lender or mortgage servicer
It’s important to get in touch with your lender immediately if you expect to be late or unable to make your monthly mortgage payment. The worst thing you can do, says Bill Halldin, a spokesperson for Bank of America, is to not communicate with your lender.
“We (at Bank of America) want to work with our customers affected by the coronavirus, so please get in touch with us,” Halldin adds.
There are programs in place for folks who are experiencing hardship. When asked what assistance is available for their customers, here’s what a few lenders said:
Ally Bank said they will defer Ally Home payments for up to 120 days for homeowners who are facing financial hardship due to an interruption in income. “During this time, interest will accrue, but you won’t be charged any late fees or have impacts to your credit,” Ally Bank said in a statement. If you need to start this process, call 1-866-401-4742.
“If a person has a hardship related to the coronavirus and is unable to pay us or has an issue with their account, we encourage them to call our client services team,” Halldin says. “Home Loans Special Payment Forbearance and auto loan extensions are available to clients to assist with suspending payments during this difficult time.”
“At Quicken Loans, our number one priority continues to be our clients and making the online mortgage process as clear and safe as possible to help provide some certainty in these uncertain times,” says John Perich, director of public relations at Quicken Loans. “We are following the processes outlined by Fannie Mae, Freddie Mac and Ginnie Mae to provide forbearance relief to those affected by COVID-19, and urge policymakers at the federal, state and local levels to act now to present options that allow mortgage servicers to help homeowners whose cash flow may be impaired by this unprecedented crisis.”
“At TD Bank, the health and well-being of our colleagues and customers is our primary concern. We recognize that people in communities that we serve may experience financial hardship due to Coronavirus, so we are offering assistance to our impacted customers. Our financial relief options for impacted TD customers are available upon request. These assistance options may include, for example, fee waivers, early access to Certificates of Deposit and payment extensions, depending on the customer’s request,” a TD Bank spokesperson said, in a statement.
If impacted customers have concerns about meeting their mortgage or home equity loan payments, they may contact 1-800-742-2651 for assistance.
“Wells Fargo is committed to helping customers experiencing hardships, including from the Coronavirus Disease (COVID-19),” says Beth Richek, vice president of corporate communications at Wells Fargo. “For customers in need of assistance, we have specialists available to discuss options for their consumer lending, small business and deposit products.”
“For our mortgage clients experiencing financial hardship because of lost work, illness or caring for a sick family member due to COVID-19, help may be available in the form of temporary payment forbearance,” says a spokesperson for TIAA Bank.
· TIAA Bank is also putting a pause on foreclosures through May 17.
· Rate locks on refinance loans will automatically be extended from 60 to 90-days.
“Navy Federal members have several options should they need a mortgage forbearance. At the end of the forbearance period, the missed payments will either be spread throughout the remaining term of the loan or added to the last scheduled mortgage payment,” says Martin Miller, corporate communications strategist at Navy Federal Credit Union. “Some members may choose to pay back the payments at the end of the forbearance period. Our initial forbearance term is three months, however if members still need help, we’re here to work with them.”
2. Be prepared to repay what you owe
It’s important to note that mortgage forbearance is not mortgage forgiveness, meaning you still have to pay back what you owe.
“Be aware, however, that you will need to repay the amount that was reduced or suspended, either as a lump sum or by adding to your normal monthly payment,” says Leslie Tayne, founder and attorney at Tayne Law Group.
A mortgage forbearance is an agreement between you and your mortgage servicer that lets you either stop making payments or lower your payments to an affordable level on a temporary basis during your hardship. This can be helpful during times like these when your job isn’t terminated, just suspended indefinitely.
For people who will lose wages during the time they’re not working, it’s important to communicate that information to your lender. You should also make a plan for how you will repay the suspended amount when your forbearance ends. Making a budget now could save you stress later, so when the time comes to repay you’ll be ready.
You can learn more about forbearance repayment options here.
3. File for unemployment
Workers whose jobs were halted because of COVID-19 are likely to be eligible for unemployment benefits. Many states have measures in place to help people who are not being compensated while their job is suspended. Check your state’s employment department to see what options are available to you.
Finally, be sure to verify the legitimacy of anyone you talk to before sharing personal information or identification. During times of crisis, scammers run rampant and prey on people looking for assistance.