Is the coronavirus crisis impacting your home and rental property? Are you having second thoughts about investing in real estate due to the possibility of not being able to make the payment? You’re not alone—Americans nationwide are struggling.
Whether your tenants can’t afford rent or you are having difficulties paying your own mortgage, there are options available to keep both landlords and renters from falling into debt. Both governments and lenders have announced ways they’re helping mortgage holders affected by COVID-19.
But first, let’s define mortgage relief and understand how it works.
What Is Mortgage Relief?
Mortgage relief is the suspension of payments on a mortgage loan, often due to financial hardship experienced by a loan holder. In most cases, this relief is temporary. The debt doesn’t go away. Instead, the lender doesn’t collect loan payments during what’s called a forbearance period.
You still owe the skipped payments—just at a future date. The lender won’t report you to a credit bureau, but typically they will continue charging interest on your unpaid debt.
Let’s say you’re unable to make your upcoming $1,000 payment. You contact your lender and explain the situation, and they agree to let you skip your next three monthly payments, totaling $3,000. These three months are your forbearance period.
Your mortgage debt’s still earning interest during the forbearance period, but you don’t have to pay for three months. You won’t lose your property and your credit score won’t go down.
This helps borrowers by allowing them to skip payments during times when they may not be working or are seeing their income decrease. It’s a short-term solution to a cash crunch. While this is a great tool to have available, it’s important to remember it’s not “free” money. You DO have to pay it back. The idea being you’ll pay it back when it’s more convenient for you.
Do I have a mortgage lender or a mortgage servicer?
It’s important to know the difference between a lender and a servicer. The lender is the institution that loaned you money to buy your property. A servicer is a company your lender hires to manage, or service, your loan. For instance, your lender might be Fannie Mae, but your servicer might be Flagstar Bank. Typically, you pay the servicer directly.
However, not all loans have a servicer. If your loan does have a servicer, you’ll contact them to discuss mortgage help. If your lender services your loan, you’ll reach out to your lender for assistance.
How Can You Apply for a Mortgage Relief Program?
Every lender or servicer is different—but the most important thing to know is that you should contact your lender when you think you need help. Do not wait until your payment is due or until you miss a mortgage payment.
Keep in mind that it may take more than one day for your lender to start your forbearance period. You may miss a payment if you wait until your due date to contact your lender—and missing a mortgage payment outside of your forbearance period can hurt your credit score. If you’re not in forbearance, your lender will report a missed payment to the credit bureaus.
No one wants a missed payment appearing in their credit history. But that’s especially true for real estate investors, who face stricter requirements when applying for loans to buy an investment property.
Many investors see the possibility of a recession as an opportunity to buy more real estate. A missed payment on a current mortgage can have an adverse effect on your ability to borrow more money for additional properties! Be smart, be responsible, and plan ahead.
Related: Coronavirus Content & Resources
What Mortgage Relief Options Are available?
Federal government mortgage relief programs
Starting on March 18, the Department of Housing and Urban Development (HUD) suspended evictions and foreclosures for 60 days. The moratorium applies only to people with mortgages backed by the Federal Housing Administration (FHA). The order not only prevents new foreclosure actions but also suspends all foreclosure actions currently in process.
Fannie Mae and Freddie Mac do not make loans. Instead, they buy loans from lenders and have servicers manage those loans. Even though you make payments to a different company—the servicer—Frannie and Freddie may own your loan. Their loan lookup tools can tell you the specifics:
Here are the relief options that the Federal Housing Finance Agency (FHFA) has directed Fannie and Freddie to offer borrowers:
- You can’t be foreclosed on or evicted for 60 days.
- You’re eligible for up to 12 months of mortgage forbearance—with no late fees.
- Reporting of past-due payments to credit bureaus is suspended.
- After your forbearance period, your servicer must work with you on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including modifying your loan.
For more information, see:
Check out the BiggerPockets guide to coronavirus relief programs for more information on benefits programs, payment assistance, and bank programs.
Keep in mind, these special rules do not apply as a blanket measure across all mortgages. If your loan isn’t held by a government agency that is a part of the program, you may not be eligible for this form of relief.
State Government Mortgage Relief Programs
- No evictions for renters and homeowners until May 31.
- Tenants must still pay rent, and landlords can continue collecting rent that’s due. But landlords cannot evict individuals from their homes for nonpayment.
- The state has asked utility companies to avoid shutoffs for people affected by COVID-19.
- No landlord and tenant proceedings until May 1. The halt includes evictions.
- No new foreclosures and evictions through May 5—but individuals still need to pay their rent or mortgage.
- Essential utility companies (electric, water, gas, telecommunications, and wastewater services) cannot stop service during the coronavirus crisis.
- No evictions and foreclosures until May 1.
- No eviction proceedings until April 10. This cancellation does not stop foreclosures that local sheriff’s offices are already executing.
- No foreclosures and evictions.
- There are no evictions for the duration of Maryland’s state of emergency.
- Utility companies cannot shut off service due to a lack of payment or charge late fees. The utility protections include water, gas, electric, sewage, phone, cable TV, and internet services.
- No foreclosures and evictions for the time being.
- Stops evictions and foreclosures for up to two months after New Jersey’s state of emergency ends.
- As of March 19, no mortgage payments required for 90 days for those facing virus-related financial hardships.
- Stops foreclosures and evictions until further notice.
- No eviction and foreclosure hearings until April 16. Eviction orders already in process will continue unless a court order stops those proceedings.
- Halts foreclosures and evictions through April 3.
- Suspension of evictions and foreclosures for residents affected by the coronavirus who are part of the Texas Department of Housing and Community Affairs (TDHCA) programs. These programs include the Bootstrap Loan Program, Homebuyer Assistance Program, and the Homebuyer Rehabilitation Assistance Program.
- Contact your lender if you took part in TDHCA’s My First Texas Home or My Choice Texas Home programs.
- Urged lenders to offer hardship forbearances to borrowers affected by the coronavirus.
- The state’s also encouraged lenders to suspend reporting late payments to credit bureaus.
Mortgage Lender Relief Programs
Bank of America
Bank of America will defer payments for mortgages and home equity lines of credit upon request. Deferrals will be handled on a case-by-case basis with month-to-month extensions available. They’ve also promised:
- No negative credit bureau reporting for up-to-date borrowers.
- No foreclosure sales, evictions, and repossessions.
To discuss your mortgage relief options, contact Bank of America at 1-800-669-6607.
Caliber Home Loans
While Caliber doesn’t have any coronavirus-specific mortgage relief options, they do offer mortgage help for customers facing financial hardship. Borrowers who need help should contact Caliber Home Loans at 1-800-401-6587.
Customers affected by COVID-19 may qualify for a mortgage forbearance period of three months. You should make a loan payment during that period, if possible. If you’re unable to make a payment during your forbearance period, Flagstar Bank will not assess a late fee. And they won’t make a negative report to the credit bureaus.
At the end of, or any time before, your forbearance period, you have the following options to resolve any past due amounts:
- Bring your loan current by paying all past due amounts, including those not paid during the forbearance period.
- Set up a repayment plan by contacting Flagstar Bank. A repayment plan adds a part of your past due amounts to your regular monthly payment until your account is current.
- Apply for a more permanent loss-mitigation solution.
For information about options from JPMorgan Chase, visit their website. You can also contact Chase by phone at 1-888-356-0023.
Members of the military activated to respond to the COVID-19 outbreak may be eligible for more benefits.
You may be eligible for help if you’ve experienced any of the following as a result of the pandemic:
- Layoffs or reduction of hours
- Office or school closures
You can discuss your loanDepot mortgage relief options by calling 866-258-6572 or via email.
If your loan’s currently in process, or if you have recently closed your loan and have questions, you should contact loanDepot Customer Care via email.
You may be eligible for temporary forbearance if you’re unable to make mortgage payments due to financial hardship from the coronavirus crisis. There’s no impact on your credit score during your forbearance period if you have a conventional loan through Quicken Loans.
You’ll need to sign into your Rocket Mortgage account and complete a form to apply.
Learn more about Quicken Loans’ coronavirus options.
If you’re affected by COVID-19, you should call U.S. Bank at 1-800-365-7900. When you call, you may need to provide:
- A brief explanation of your situation.
- A detailed list of your household expenses.
- Proof of household income (recent pay stubs, tax returns, or profit-and-loss statements).
United Wholesale Mortgage
United Wholesale Mortgage doesn’t specify options related to coronavirus. But they do provide support for customers facing financial hardship. Learn more about the options available to you.
If you’re affected by the coronavirus crisis, you may be eligible for fee waivers, payment deferrals, and other mortgage help. Wells Fargo is also suspending residential property foreclosure sales and evictions.
To discuss your Wells Fargo mortgage relief options, call 1-800-219-9739.
Do you know of any additional mortgage relief programs?
Tell us below.