submitted by F. Alex Fehrman, Esq.
What if I have trouble paying my mortgage?
This is a question that nobody wants to ask. Unfortunately, as the Covid-19 epidemic drags on and many individuals face an economic hardship, it is a question more and more people are asking during this difficult time. When your house is your anchor to stability and normalcy, anything that threatens that stability is sure to cause anxiety. The silver lining is that there are safeguards in place to lessen the impact Covid-19 has on homeownership. Currently New York State is not allowing filings of any action that is not deemed “essential” and fortunately for homeowners, foreclosures are not an essential court function. Additionally, the state has put a hold on all foreclosure sales and evictions for at least the next forty-five days. For homeowners who were already facing a hardship before the coronavirus hit, this is great news and prevents homeowners from being removed from their homes during this epidemic. It also gives homeowners time to consult with an attorney that may be able to assist them in a foreclosure action.
What if I was fine before the outbreak started and now I’m out of work?
This is a great question that many homeowners will be asking in the coming weeks or months. For homeowners who experienced a hardship caused by the Covid-19 outbreak most lenders are offering forbearances during this time. Some of these programs have been mandated by the federal backers for home mortgages (such as HUD, FHA, Fannie Mae and Freddie Mac). Since these federal backers and insurers comprise the vast majority of mortgages in this country, most homeowners will be able to apply for a forbearance. If approved for a forbearance, your lender will not require mortgage payments for up to 12 months. This will give you as a homeowner time to get back to work once the Covid-19 restrictions have been lifted. Lenders are now required to expedite reviews on applications for forbearance as well so homeowners should have an answer within a few weeks once they submit an application. Keep in mind that if you are applying for a forbearance you will need to provide proof of a hardship caused by the Covid-19 epidemic. This includes loss of employment brought about by the epidemic. You do not need to have contracted the virus or be directly related to someone who contracted the virus.
If approved for a forbearance your lender will not be able to report the status of your loan to credit agencies under new federal guidelines specifically put in place to counter the economic impact of Covid-19. Furthermore, once the forbearance ends your lender will be required to work with you to modify your loan to ensure an affordable payment and will not be able to accrue late fees during the forbearance. Keep in mind that these guidelines are specifically for homeowners experiencing Covid-19 related hardships. If your hardship is not related to Covid-19 (such as an automobile accident that put you out of work) you will likely not qualify for these programs. However, there are other relief options for homeowners in those circumstances that the Center for Elder Law & Justice can assist with.
To inquire about a loan forbearance you should contact your mortgage servicer, the institution to which you normally make your mortgage payments. They should be able to walk you through the application process. Ideally, this will give homeowners the time necessary to return to work and start making mortgage payments again once the Covid-19 situation has been resolved. Of course, if you can make payments during this time you should continue to do so. If you are experiencing a hardship, though, there are safeguards in place that may ease some of the burden during this difficult time. If you have any questions or concerns please feel free to call our Legal Advice Helpline at 844-481-0973.