Mortgage Forbearance Law for Coronavirus-Affected Homeowners May Expire Soon
Though there is a national state of emergency due to the coronavirus pandemic, the mortgage forbearance law enacted to help affected homeowners will expire as soon as the national state of emergency expires, or sooner if the pandemic extends into next year.
Mortgage payments, most homeowners’ largest monthly bill, will be in jeopardy of not being paid if a homeowner loses their job or is otherwise affected by the coronavirus. Because of this, Congress passed the CARES Act in March 2020.
Under the CARES Act, homeowners have the right to request a mortgage forbearance. The forbearance lasts up to 180 days (six months) and can be extended for another 180 days. Credit must not be reported negatively and banks and mortgage servicers are prohibited from initiating foreclosure if the homeowner is in a forbearance.
The mortgage forbearances are only available to homeowners with loans owned or backed by Fannie Mae, Freddie Mac, the FHA, or the VA. If you do not know who owns your mortgage, you may be able ask your servicer or look it up online. Fannie Mae and Freddie Mac each have an online tool for checking if they own your mortgage. Under Section 4022 of the CARES Act, any homeowner “may request forbearance on the Federally backed loan, regardless of delinquency status, by ... submitting a request to the borrower’s servicer [and by] affirming the borrower is experiencing a financial hardship.”
North Carolina’s easing of social distancing forebodes the end of the forbearance program. Though many workers are still working remotely – if at all – the forbearance program will end as soon as the federal government declares the end of the national state of emergency, or on December 31, 2020, whichever comes sooner. With businesses already opening up in many states, homeowners should prepare for the national state of emergency to end and should act now.
Foreclosure of delinquent loans is prohibited only until May 18, 2020. After that, banks and foreclosure law firms in North Carolina are likely to begin planning for how to address any mortgages that are in default. No additional relief is available after that time unless other state or federal legislation is enacted.
Unfortunately, some consumer advocates are reporting that banks are wrongly denying some homeowners’ forbearance applications. Incorrect information is being provided to homeowners telling they must go behind on their payments. Other banks are only granting one or two month forbearances.
If you have been affected by the coronavirus or are having other financial difficulties, you should make an effort to document every communication with your lender. If you have questions or run into issues, it will be vital to be able to provide this information to your legal representative.
Culik Law is a consumer protection law firm. Our attorneys have been representing homeowners for over a decade in issues related to mortgage, foreclosures, and forbearances. If your mortgage company is not following the law or if you have questions about your rights, contact us to see if we can help you.