Rebecca Jernigan, Financial Planning Associate
If you have lost income, either directly or indirectly, due to the COVID-19 outbreak, you may be eligible for reduced or suspended mortgage payments. Federal regulators are ordering mortgage lenders to provide payment flexibility to those who need it. As of now, this applies to mortgages guaranteed by Fannie Mae and Freddie Mac, but one can speculate that the rest of the industry may follow suit.
For perspective on the scope of this regulatory order, Fannie Mae and Freddie Mac cover around half of all home loans in the United States. Examples of mortgage relief options can include:
• mortgage forbearance of up to 12 months
• waiving penalties and/or late fees
• suspending foreclosures and evictions
• suspending the reporting of delinquent payments to credit bureaus
• loan modifications after forbearance
These efforts are meant to significantly improve financial stability for those who have lost a source of income as a result of the outbreak. Relief varies, so if you or someone you know requires assistance, we’d encourage contacting your mortgage service provider to discuss your particular options. We understand that not all mortgage servicers are handling forbearance the same. For example, some may ask for repayment of the forbearance in a lump sum. Also Note: Borrowers who accept forbearance will be considered in arrears which will impact their ability to finance in the future. It seems only borrowers who must, should consider this option. If you are faced with choices, please bring them to us for input.
The notice from the Federal Housing Finance Agency (FHFA) follows…