The COVID-19 pandemic has made it harder for millions of homeowners to pay their mortgages. To reduce the risk of widespread foreclosures, Congress recently passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Mar. 27, 2020). The CARES Act gives some borrowers temporary protection from foreclosure. But about a third of all borrowers are not covered. This article explains who is covered by the CARES Act, what it offers, how to help those who are covered, and how to help those who are not. Our thanks to the National Consumer Law Center and LAWNY for providing this information.
Please contact Catholic Charities of Chemung/Schuyler to talk with our skilled Housing Counselors who can help you work through this information and determine what course of action is best for you: Karen Wheeler (734-9784 x2132) Amy Bell (734-9784 x2127)
Homeowners Protected by the CARES Act
The CARES Act mortgage relief provisions apply to “federally backed mortgage loans,” defined as first or second mortgages on 1–4 family homes (including cooperative and condominium units) issued, purchased, or backed by the following agencies:
Fannie Mae or Freddie Mac;
U.S. Department of Veterans Affairs (VA);
Federal Housing Administration (FHA), including home equity conversion (HECM) reverse mortgages, and mortgages under the Indian Home Loan Guarantee program; and
U. S. Department of Agriculture (USDA).
- Assistance for Homeowners with Federally Backed Mortgages
If the borrower has a federally backed mortgage loan, the CARES Act provides two kinds of relief: a foreclosure moratorium and the right to a forbearance.
– Foreclosure Moratorium. CARES ACT forbids servicers of federally backed mortgage loans from “initiat[ing] any judicial or nonjudicial foreclosure process, mov[ing] for a foreclosure judgment or order of sale, or execut[ing] a foreclosure-related eviction or foreclosure sale” through May 17, 2020. This applies only to occupied properties and does not require the homeowner to take any action. Nevertheless, contact the servicer’s attorney to ensure that any scheduled foreclosure is canceled.
– Forbearance of Mortgage Payments and How to Get One. A forbearance is a temporary suspension of the borrower’s duty to make full mortgage payments and the mortgage creditor’s right to enforce any delinquency.
Homeowners Who Do NOT Have a Federally Backed Mortgage Loan
If a homeowner has a mortgage loan that does not meet the definition of “federally backed mortgage loan,” CARES Act protections do not apply (except for the credit reporting provisions in CARES Act § 4021, discussed above).
- State Foreclosure Relief
Many states have adopted broad foreclosure moratoriums that protect borrowers regardless of loan type, and some states have instituted mortgage loan forbearance programs. New York State has issued orders related to forbearance. Contact Catholic Charities’ Housing Counselors for more information.
- Voluntary Federal Guidance
Federal bank regulators have issued guidance encouraging institutions to work with borrowers and relaxing some standards that may previously have limited a servicer’s flexibility to offer relief.
- How to Get Non-CARES Act Relief and What to Ask For
Borrowers should contact their servicer by phone or online. Online may be the faster option as servicers are currently overwhelmed by the number of calls they are receiving. Log in to the borrower’s account and see what options the servicer is offering. It may be possible to apply online. Borrowers can also request assistance by writing to the servicer.