Day by day, the U.S. government continues to find ways to soften any potential blows consumers might be hit with during the COVID-19 pandemic -- a more understanding IRS, stimulus checks to help offset any financial downturns, etc.
On Tuesday, the Consumer Financial Protection Bureau (CFPB) stepped up to the podium to let homeowners know that there is help available from both state and federal governments if they are having trouble with their mortgages during this crisis.
First things first
The CFPB says the first thing a consumer needs to do is assess their particular situation.
“If you can pay your mortgage, pay your mortgage,” the Bureau writes. “Don’t call your mortgage servicer if you aren’t facing an immediate issue. Mortgage servicers are getting a lot of calls and need to first help those who won’t be able to pay their mortgage. Check their website first for possible options.”
The CFPB recommends that borrowers have an honest discussion with their mortgage servicer as soon as possible if they can’t pay their mortgage. And the same applies if a borrower can pay only part of the mortgage.
The way out is through
Yes, phone lines are jammed and wait times are long, but if you’re in a tough spot paying your mortgage, stating your case to the lender is the only way through this.
The Bureau hasn’t prepared a script for consumers to read verbatim when they call a lender, but it does lay out the essentials of what the borrower needs to communicate. The CFPB’s unabridged version is available on its site, but here are the basic suggested steps:
Have your account number handy. Click here for questions to ask and information to have ready for your call.
If you don’t know or can’t remember who currently services your mortgage, there are several ways to find out, including looking at your mortgage statement for contact information. Click here for the CFPB’s rundown on how you can find out who owns or services your mortgage.
Determine if your mortgage is federally backed. You need to know this because the Coronavirus Aid, Relief, and Economic Security (CARES) Act established two protections for homeowners with federally backed mortgages:
A foreclosure moratorium
A right to forbearance for homeowners who are experiencing a financial hardship due to the COVID-19 emergency. Forbearance, in the context of a mortgage procedure, is an agreement between the lender and the borrower to delay a foreclosure.
To qualify for protections under the CARES Act, a mortgage must be federally owned or otherwise backed by one of the following federal agencies and entities:
U. S. Department of Agriculture
USDA Guaranteed For additional help regarding USDA-related mortgages, ConsumerAffairs has a guide covering that category.
Federal Housing Administration (FHA) (Includes reverse mortgages)
U.S. Department of Veterans Affairs (VA) As additional help, ConsumerAffairs also offers a guide on VA loan lenders.
On the off-chance that you don’t know who owns your mortgage, the Bureau’s suggestion is to call your servicer who, by law, is required to give you the full contact information of who owns your home loan.
Get it in writing. He said/she said won’t cut it if you are ever asked to show proof that you’ve gotten a forbearance or another mortgage relief option.
The Bureau suggests borrowers ask their servicer to provide written documentation that a) confirms the details of your agreement; and, b) confirms what the terms are. That last part is important for the simple fact that some forbearance programs may have caveats that are probably better read on paper rather than thinking you understand what’s said on a phone call. “You may owe all of your missed payments at one time, or additional payments at the end of the mortgage might be required, so make sure you’re familiar with the final terms,” the Bureau says.
What do you do when your mortgage relief option becomes reality? Whether you’re in a CARES Act forbearance period or utilizing another mortgage relief option, there are five things to do in order to protect yourself.
Keep written documentation on hand. You want to make sure that you have this documentation available in case there are any errors on your monthly mortgage statements to ensure that your statement reflects the assistance provided.
Pay attention to your monthly mortgage statement. Continue monitoring your monthly mortgage statements to make sure you don’t see any errors.
Keep an eye on your credit. It’s a good idea to routinely check your credit reports in order to make sure there are no errors or inaccuracies. If you stop making mortgage payments without a forbearance agreement, the servicer will report this information to the credit reporting companies, and it can have a lasting negative impact on your credit history. However, you can work to dispute an error if one has been made. Get more information about credit reporting and coronavirus here.
Once your income is restored, contact your servicer and resume your payments. With forbearance, you still owe the payments that you missed, but fewer missed payments means you’ll owe less down the road.
If you’re continuing to receive some income that turns out to be more than you need for your bills and expenses (including anything you keep paying on your mortgage), consider putting the extra money away so you can use it to pay off what’s needed later. If you can save any money now, it’ll be helpful when payments are due later.
Don’t lose hope
While jumping through all these hoops seems like a headache, it’s not meant to be. There’s lots of ifs, ands, or buts to this; if you’ve read everything the CFPB suggests and you still feel like you need assistance, the agency offers these suggestions
HUD-Approved Housing Counselors. The U.S. Department of Housing and Urban Development (HUD)-approved housing counselors can discuss options with you if you’re having trouble paying your mortgage loan or reverse mortgage loan. This may also include forbearance or a modified payment program.
Credit Counselors. Reputable credit counseling organizations are generally non-profit organizations that can advise you on your money and debts, and they can help you with a budget. Some may also help you negotiate with creditors. There are specific questions to ask to help you find a credit counseling organization to work with.
Lawyers. If you need a lawyer, there may be resources to assist you through your local bar association, legal aid, or if you are a service member, your local Legal Assistance Office .
The CFPB is working diligently to make sure consumers are completely aware of every little nuance that comes to light as the world gets through this outbreak. The Bureau publishes all COVID-19-related information and blogs to a single resource page available here.