FOR HOMEOWNERS WITH FEDERALLY BACKED MORTGAGES

The CARES Act puts in place two protections for homeowners with federally backed mortgages:

• First, your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
• Second, if you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.

Contact a HUD counselor to discuss these options.

The method of repayment varies depending on your loan and the options offered. Not all borrowers will be eligible for all options. You should take steps to be aware of how these programs work and what you can expect in terms of repaying these amounts.

Generally, repayment of forbearance occurs by the amount being repaid:

• in one lump sum at the end of the forbearance period
• added onto your existing monthly payments over a set number of months
• added to the end of your loan as additional payments or as a lump sum

Just as forbearance may differ between the federally backed agencies or entities, so does the repayment of the forbearances.

Please check back for updated information as well as check with your loan servicer and the website of the agency or entity that owns or guarantees your loan. The following information provides some of the options to repay your forbearance.

• Fannie Mae & Freddie Mac loans:
  • Borrowers allowed to repay past due amount within 12 months after forbearance ends;
  • Extend the term of the mortgage by the exact number of months in forbearance;
  • Add past due amounts into loan balance and extend the term of the loan by the number of months necessary to make the monthly payment the same as the previous payment;
  • Add past due amounts into loan balance and extend term of loan for 40 years (480 months).
• FHA loans:
  • Borrowers may enter into a repayment plan to repay past due amounts within 6 months after forbearance ends;
  • Extend term of mortgage to 30 years (360 months) by adding the past due amounts into the previous monthly payment;
  • Past due amounts paid off at the end of the loan in a lump sum.
• VA loans:
  • Borrowers may enter into a repayment plan to repay past due amount within 6 months after forbearance ends;
  • Add past due amount into loan balance and extend term to 30 years (360 months);
  • Targets lower payment of 31% of borrower’s gross income by extending loan term to 30 years (360 months) with option to forbear principal.
• USDA loans:
  • Borrowers may enter into a repayment plan to repay past due amounts within 6 months;
  • Add past due amount into loan balance and extend term to 30 years (360 months) as long as payment less than or equal to payment prior to forbearance;
  • Lump sum repayment at loan payoff.