Hardship forbearance is an option for those who are unable to make monthly mortgage payments.
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Homeowners who are facing a temporary hardship due to the coronavirus and heightened safety measures such as businesses shutting down have options to postpone mortgage payments, according to the Federal Housing Finance Agency.
The reach of the pandemic across the nation represents a stark reminder that access to paid leave and unemployment insurance is vastly unequal in the United States. In an effort to stave off foreclosures, FHFA director Mark Calabria advised mortgage servicers this week to offer forbearance options to those who might be in jeopardy of falling behind on mortgage payments.
With this option, a lender temporarily reduces or suspends mortgage payments for up to six months while borrowers get back on their feet. Interest will still accrue and be tacked back onto the loan.
Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments when a homeowner’s financial situation has stabilized.
Calabria said, “To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment. For borrowers that may be experiencing hardship, I encourage you to reach out to your servicer.”
He added that Fannie Mae, Freddie Mac and the Federal Home Loan Banks continue to provide support to the secondary mortgage market, and the Uniform Mortgage Backed Securities market continues to operate at its normal level.
On its website, Freddie Mac said it is actively tracking news and information about the virus and making decisions based on guidance from the U.S. Centers for Disease Control and Prevention and the World Health Organization.
The public government-sponsored enterprise stated: “While we understand that the impact to borrowers may be temporary, it is still a hardship, and servicers must work with impacted borrowers who are unable to make their mortgage payments to ensure they are evaluated for a forbearance plan or other appropriate assistance.”
The Federal Housing Administration also announced mortgage payment assistance available to those affected by the virus.
According to the FHA, “As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers, including those that could be impacted by the coronavirus, to help prevent them from going into foreclosure.”
Rather than hiding from a lender, it’s wise to reach out for help. Borrowers experiencing financial difficulty should contact their mortgage servicer immediately to find out what forbearance or hardship options might be available.
The Consumer Financial Protection Bureau’s Find a Counselor tool provides a list of counseling agencies approved by the Department of Housing and Urban Development. Homeowners can also call the HOPE Hotline, open 24 hours a day, seven days a week, at 888-995-HOPE (4673). In addition, here is a list of banks offering relief to customers affected by the coronavirus.