Federal agencies offers consumer guidance on coronavirus-related mortgage relief

Of the many things the U.S. government has stepped in to help consumers with during the COVID-19 pandemic, one significant one -- mortgage relief -- hasn’t gotten much ink. 

That’s all changed now. The Consumer Financial Protection Bureau (CFPB) and the Conference of State Bank Supervisors (CSBS) are stepping up to inform homeowners of their rights to mortgage payment resolution and foreclosure protection under the CARES Act.

Why now? According to John W. Ryan, CSBS President and CEO, the whole who/what/when/where/how has turned into a hot mess. 

“State regulators are hearing from borrowers who are confused about mortgage relief, and, in some cases, getting inconsistent information about forbearance,” Ryan said in a statement.

Consumer options for mortgage relief

Here are the basics for CARES-related mortgage relief:

Eligibility: To be eligible for protections under the CARES Act, a mortgage must be backed by one of these federal agencies and entities listed below.

• Conventional loans purchased or secured by Fannie Mae and Freddie Mac

  • Fannie Mae Loan Lookup

  • Freddie Mac Loan Lookup

• Federal Housing Administration (FHA)

• Home Equity Conversion Mortgage (HECM)

• U.S. Department of Veterans Affairs (VA)

• U.S. Department of Agriculture (USDA), including USDA Direct and USDA Guaranteed

Consumers can also visit this website to determine which relief they qualify for. When dealing directly with a mortgage servicer (the company to which monthly payments are made), they can also tell the consumer if the loan is federally backed. 

Timeframe: Homeowners have the right to obtain a 180-day pause in paying their mortgage. They can also temporarily lower mortgage payments if they are a borrower on a federally backed mortgage loan.

Proof: Homeowners must be able to prove that they are experiencing a financial hardship -- either directly or indirectly -- because of the COVID-19 emergency. 

Consideration: The agencies advise consumers that the decision to ask for relief should be considered carefully. “Forbearance is a temporary reduction or suspension of your monthly payment to help you through a difficult period,” the CFPB notes.

The mortgage still has to be paid: The CFPB also reminds consumers that this is not a “free money” deal -- anyone using this option must repay any missed or reduced payments in the future. Those options will have to be worked out between the consumer and lender at the end of the forbearance period.

Caution: As it goes with things like this, scammers may want to jump in and try and get their hands on some money. It’s crucial for anyone who is considering taking this route that there are NO fees associated with obtaining forbearance. If anyone offers to help out with the process and asks for a fee, the borrower should end any communication with that person or company immediately.

Questions?

The agencies have tried to make this process as simple as possible. Still, they’re ready if a mortgage company asks questions that the borrower may not have, or if a consumer needs clarification on any element.

To start, the agencies suggest the following online resources that consumers can turn to:

• The National Consumer Law Center (NCLC) webpage offers a summary of foreclosure alternatives for borrowers with COVID-19 hardships.

• CFPB COVID-19 Mortgage and Housing Assistance Page

• CSBS COVID-19 Consumer Resources Page

• American Association of Residential Mortgage Regulators (AARMR)