Unfortunately, the COVID-19 pandemic has had a big impact across the globe. Not only has the virus spread and impacted the health of thousands, but the pandemic has also taken its toll on the economies in many countries, including the United States.
For instance, millions of Americans are filing for unemployment. In fact, last week a record 3.28 million workers applied for unemployment benefits. Sadly, since millions are out of work right now, many are finding it difficult or even impossible to pay their mortgage or rent.
Thankfully, many new programs are getting rolled out that are designed to help homeowners and renters receive assistance and avoid eviction during this time. These programs and temporary changes in policy are being provided by everyone from the federal government, private lenders, landlords and more.
If you’ve been financially impacted by the pandemic, you may be able to get some help through a coronavirus assistance program. Keep in mind that the policies are changing day by day, so you will always want to double-check with your lender to receive the most up-to-date information.
First, let's chat about evictions and foreclosures.
The Department of Housing and Urban Development recently announced that it is suspending all foreclosures and evictions through April 30th. Plus, the Federal Housing Finance Agency has directed both Fannie Mae and Freddie Mac to suspend evictions and foreclosures for a minimum of 60 days as well.
On March 22, the National Multifamily Housing Council sent out a release urging landlords to halt evictions for any renters who are financially impacted by COVID-19. The release also requested that a 90-day pause be placed on any rent amount increases.
This is certainly reassuring news to anyone fearful that they may lose their home if they can’t make payments due to financial instability from the pandemic.
However, it’s important to keep in mind that the policies regarding eviction and foreclosure suspensions do vary throughout the United States. In fact, the process for handling evictions currently varies even at a county level. This makes it crucial that you keep up to date on the current policies in your area.
Assistance for Homeowners
If your ability to pay your mortgage is affected by COVID-19, and your loan is owned by select institutions, you may be able to delay payments for a temporary period.
The assistance offered does vary depending on who serviced your mortgage loan, so make sure you look into the options provided by your specific institution.
Federally Backed Loans
The CARES Act, which was signed into law on March 27th, 2020, is designed to provide substantial mortgage payment relief to many. This law directs all lenders who hold federally backed mortgages to suspend payments for up to 12 months for borrowers who have lost income due to the outbreak. The law also suspends many foreclosures and foreclosure-related evictions during the pandemic.
If your loan is federally backed, you may qualify to delay payments for a temporary period. During this time, the following will occur:
- You will not incur late fees
- You will not have delinquencies reported to credit bureaus
- Foreclosure proceedings will be suspended
Then, at the end of the temporary relief period, if you are still struggling to make your mortgage payments, additional assistance programs may be available to you. You will have the option to work with your loan servicer to come up with a plan that works for your situation.
All loans owned by Fannie Mae and Freddie Mac qualify. Also, if your loan is insured through the Federal Housing Administration (FHA) or it is guaranteed through the Department of Veterans Affairs, it also qualifies. There are many different federally backed mortgage institutions, so reach out to your mortgage servicer to see what forbearance you qualify for.
Even if your mortgage is being managed by a bank, you likely still qualify for a deferral or other form of assistance during this time. Most major banks and even smaller branches have already announced their COVID-19-related modifications as many are adopting policies similar to those mandated in the CARES Act.
For example, Ally Bank is currently offering payment deferral for up to 120 days for those who are affected by COVID-19. Also, U.S. Bank is offering a payment forbearance program for up to 90 days for their customers.
Many private banks are currently offering some form of mortgage relief. This includes big banks like Chase, Citi, Wells Fargo, and even smaller banks as well. Because each institution is offering different programs and likely has different qualifications, make sure that you reach out to your mortgage servicer to see what their specific policy is.
Assistance for Renters
If you are renting a property, you may qualify for rent relief if you’ve been impacted by COVID-19. Currently, the relief that you may receive does depend on whether your rental property is backed by the federal government.
Federally Backed Rentals
The CARES Act mandates 120 days of eviction relief for tenants of federally backed housing. This 120-day eviction moratorium means that your landlord may not penalize you or charge you any fees for paying your rent late. This does not fully relieve you from paying your rent, it simply means that you cannot be evicted for late payment during that period.
Housing that is covered includes:
- Rentals covered through the Violence Against Women Act of 1994
- Rentals covered by the rural housing voucher program
- Any rental housing that has a federally backed mortgage
Additional policies may be adopted at any time, so be sure to continue doing your research to stay up to date.
All Other Rentals
If your rental housing is not backed by the federal government, you may still qualify for assistance during the pandemic. Many landlords/apartment building owners are offering arrangements to help you if you are unable to pay your rent. Some states are offering financial assistance to landlords so that they can allow their renters to defer rental payments for a period.
For instance, the Utah Apartment Associate recently announced an optional Rent Deferral Agreement that landlords and tenants can sign. As of right now, the agreement in Utah is optional, and landlords are not required to offer deferment. You can learn more here.
Keep in mind that COVID-19 rental assistance varies greatly in each state and for each landlord. Reach out to whoever you pay your rent to in order to see what options you have during this time.
Do Not Just Stop Paying
It’s crucial that you don’t just stop making your mortgage or rent payments during this time.
If you have a mortgage, regardless of whether your loan is backed by a private lender or the federal government, you must contact them first and have the deferral officially set up before you stop paying. If you fail to contact your lender, you could face serious penalties.
The same is true for renters as well. It is important to speak to your landlord to get something set up before you stop making your rent payments. Otherwise, you could still potentially face eviction or other consequences.
What do you think about these COVID-19 mortgage and rent deferment options? Let us know in the comments!
Also, as always, feel free to reach out to Scott or Natalie anytime at 435-901-4309/801-244-2367.