The COVID-19 pandemic brought unprecedented financial challenges to homeowners across the United States. In response, the federal government introduced the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included vital provisions for mortgage relief. If you’re a homeowner struggling to make mortgage payments, understanding the Cares Act Relief Program Mortgage options can provide a crucial lifeline. This guide will walk you through the key aspects of this program and how it can help you navigate financial hardship.
Key Components of the CARES Act Mortgage Relief Program
The CARES Act, enacted in March 2020, offered several layers of protection for homeowners with federally backed mortgages. These protections were designed to prevent foreclosures and ease financial burdens during the pandemic. The primary components of the cares act relief program mortgage included:
Mortgage Forbearance
One of the most significant aspects of the CARES Act was the mortgage forbearance program. This provision allowed homeowners experiencing financial hardship due to COVID-19 to request a temporary pause or reduction in their mortgage payments.
- Eligibility: This forbearance was available to homeowners with federally backed mortgages, including those backed by agencies like Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), and the Rural Housing Service (RHS).
- Duration: Initially, the CARES Act mandated servicers to grant up to 180 days of forbearance, with the option to extend for another 180 days. This provided a substantial window for homeowners to regain financial stability.
- Terms: Importantly, during the forbearance period, servicers were prohibited from charging late fees, penalties, or accruing interest beyond what would have been calculated if payments were made on time. This ensured that homeowners weren’t further penalized while seeking relief.
Foreclosure Moratorium
To further protect homeowners, the CARES Act also implemented a foreclosure moratorium. This measure temporarily halted foreclosure proceedings, foreclosure-related evictions, and foreclosure sales for federally backed mortgages.
- Purpose: The foreclosure moratorium was crucial in preventing homeowners from losing their homes during the economic uncertainty caused by the pandemic.
- Timeline: While initially set for a shorter period, the foreclosure moratorium for federally backed mortgages was extended multiple times, providing extended security for struggling homeowners. It’s important to note that specific moratorium periods have varied, and homeowners should stay informed about current regulations and extensions.
Credit Protection During COVID-19
Recognizing the potential impact of forbearance on credit scores, the CARES Act included provisions for credit protection.
- Reporting Requirements: For homeowners who entered into a forbearance agreement or modified payment plan due to COVID-19, the Act required credit reporting agencies to report these accounts as “current.” This meant that availing of mortgage relief under the CARES Act wouldn’t automatically negatively impact a homeowner’s credit score, provided they met the terms of their forbearance agreement.
- Duration of Protection: This credit protection was in effect for a specific period linked to the national emergency declaration related to the coronavirus.
Determining if Your Mortgage is Federally Backed
To access the cares act relief program mortgage benefits, it’s crucial to determine if your mortgage is federally backed. The majority of mortgages in the U.S. are, but it’s essential to confirm. Here’s how:
- Fannie Mae and Freddie Mac Loan Lookup Tools: These government-sponsored enterprises own a significant portion of mortgages. You can use their online loan lookup tools to check:
- Contact Your Mortgage Servicer: If the online tools don’t provide clarity, contact your mortgage servicer directly. They can confirm if your loan is backed by FHA, VA, or RHS.
Additional Mortgage Relief Options
Beyond the core components of the cares act relief program mortgage, other related options and subsequent programs have emerged to further assist homeowners:
Payment Deferral
Agencies like Fannie Mae and Freddie Mac introduced payment deferral options. This allowed homeowners to address missed payments due to forbearance by deferring them to the end of the loan term, or when the home is sold or refinanced. This prevented the need for a lump-sum repayment at the end of the forbearance period.
FHA Partial Claim
For FHA-backed mortgages, the COVID-19 National Emergency Partial Claim was implemented. This option allowed servicers to advance funds on behalf of homeowners to reinstate their loans after forbearance. The repayment of this advanced amount was structured as an interest-free subordinate mortgage, payable only when the first mortgage is paid off.
Navigating Mortgage Relief: Key Steps for Homeowners
If you are facing financial hardship and believe you are eligible for cares act relief program mortgage assistance or other related programs, here are crucial steps to take:
- Contact Your Mortgage Servicer Immediately: Don’t delay. Reach out to your mortgage servicer as soon as you anticipate difficulty making payments. Be prepared for longer wait times due to high call volumes, and explore online options on their website.
- Understand Your Loan Type: Determine if your mortgage is federally backed using the lookup tools or by contacting your servicer. This will clarify your eligibility for specific programs.
- Inquire About Forbearance Options: Specifically ask about COVID-19 related forbearance options and the terms involved. Understand the duration, repayment options, and any potential impact on your credit (although CARES Act aimed to protect credit).
- Document Everything: Keep detailed records of all communications with your servicer, including dates, names, and the content of conversations.
- Explore Additional Resources:
- HUD Resources: The U.S. Department of Housing and Urban Development (HUD) provides resources for homeowners. Explore their COVID-19 Resources for Homeowners.
- CFPB Website: The Consumer Financial Protection Bureau (CFPB) offers valuable information and tools for homeowners facing mortgage challenges. Visit their website.
Conclusion
The CARES Act relief program mortgage offered critical support to homeowners during a challenging period. While the initial phases of the CARES Act programs have evolved, understanding the principles of forbearance, foreclosure moratoriums, and available resources remains essential. If you are currently experiencing mortgage difficulties, proactively contacting your servicer and exploring available options is the most important step you can take to secure your financial well-being and housing stability. Remember to utilize the resources provided by HUD and CFPB to make informed decisions and navigate your mortgage relief journey effectively.
