The CARES Act passed this spring includes accommodations for mortgage holders having a hard time making monthly payments. But as with pretty much all parts of the government’s coronavirus relief efforts, getting that help hasn’t been easy for many borrowers.
Some customers have been getting inconsistent information from their mortgage services, which has only made the process of getting payment relief more confusing, Jon Ryan, president and CEO of the Conference of State Bank Supervisors (CSBS) told reporters on a call Friday.
The CSBS partnered with the Consumer Financial Protection Bureau (CFPB) to create a relief guide for consumers seeking help with their mortgage payments.
When the CARES Act was passed at the end of March, did two major things for borrowers with federally backed mortgages:
It paused the foreclosure process through June 30, and it allowed homeowners to request a 180-day forbearance on their mortgage payments. An additional 180-day extension is available at the end of the initial payment relief period.
To request a forbearance, you need to tell your loan servicer that you’re experiencing financial hardship due to the coronavirus, but you don’t need to provide documents proving that hardship. The forbearance period is available whether or not your loan was delinquent prior to March 13, which is when the president declared the coronavirus emergency.
It’s important to understand that this relief doesn’t cost anything extra in terms of fees. The Consumer Relief Guide says to be wary of anyone who offers to help you with your forbearance for a fee.
Putting your mortgage into forbearance won’t accrue additional fees or penalties, but you will need to make the payments you skipped later on. “At the end of your forbearance period, you and your servicer will determine how you will repay any missed payments,” the guide states. In most cases you’ll have a few options for how to make the skipped payments, including a repayment plan or an extension of the loan term. A lump-sum repayment shouldn’t be the only option for many borrowers, according to the guide.
If you enter forbearance, you’re still allowed to make payments in the amount of your choice during that period. In addition, taking that relief period can’t negatively impact your credit report—the CARES Act requires mortgage services to report accounts as current as long as they were current at the time the forbearance was applied.
You may want to download and save the CFPB and CSBS’s guide to reference when you communicate with your mortgage servicer. You can get it here.
Have you gotten conflicting information from your mortgage servicer? Have you experienced long wait times to talk to someone, or has the process been easy? Let us know in the comments.