There is help available during this trying time. The federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) passed on March 27, 2020 provides for temporary mortgage and rent relief. Your state government, as well as private mortgage lenders and servicers, are also offering mortgage and rent relief programs.
If you are struggling to pay your mortgage or rent due to income loss from the Coronavirus pandemic, you will likely qualify for some temporary relief, but bear in mind that this relief is very short-lived.
When this crisis passes, you must evaluate your financial situation honestly. Can you afford your home?
If the answer is no, you might consider filing bankruptcy or applying for a mortgage modification. These options can sometimes help you reduce your mortgage payments or perhaps allow you to stay in your home. However, if you simply cannot afford to keep your property, you can surrender the property in bankruptcy and walk away with no debt.
The Law Office of David Offen has helped thousands of clients reorganize their mortgage debt. Why wait? While taking advantage of one or more of the numerous relief programs available to homeowners, call us at 215-625-9600 and talk with us about your long-term finances. Your initial consultation is free of charge – what do you have to lose, except your debt itself? We can help you make your home more affordable.
Relief for Homeowners with Federally-Backed Mortgages
Struggling Homeowners’ Right to Forbearance
The CARES Act provides that federal mortgage lenders Freddie Mac and Fannie Mae offer monthly mortgage payment forbearance to borrowers experiencing financial hardship due to the coronavirus and mandated social distancing.
“Forbearance” means you do not have to pay, or that you will pay a reduced amount. The available forbearance term is 180 days, extendable for another 180 days if necessary, for a total of twelve months. Late charges and other penalties will not accrue. Keep in mind that you will eventually have to pay what you skipped and that this program does not erase mortgage payments, it only delays them.
You must apply for forbearance, so don’t just stop paying because then you will incur late fees and penalties.
Call your lender if you’ve lost income due to COVID-19 and can’t afford your mortgage. It may take a while to get someone on the phone because there are a lot of Americans in the same boat as you right now, but it will be worth it if you are approved for temporary forbearance under the CARES Act. Think of the stress relief.
Make sure that when you talk with your lender or servicer, you get written documentation of the relief you’ve been granted just in case an administrative error occurs. Lenders and servicers are overburdened right now trying to help all of the many financially-distressed homeowners, so protect yourself from possible errors and problems with your account by getting everything in writing.
Foreclosure Moratorium Under the CARES Act
Foreclosures are suspended and prevented under the CARES Act for 60 days after March 18, 2020. If you were in an active foreclosure proceeding, that proceeding will be suspended for this period of time. Also, during this time, a new foreclosure action cannot be filed against you if otherwise your lender or servicer would be able to file under the foreclosure rules in your state.
This prevents new foreclosure lawsuits, foreclosure judgments from being entered, and sheriff sales from happening until 60 days after March 18, 2020, unless the federal government passes more legislation extending that term.
What to Do if You Are in Foreclosure Right Now
You were struggling to pay your mortgage before, and now you are in even worse financial shape due to COVID-19-related job loss or reduction in hours. The CARES Act bought you some time in your home, but this is very temporary.
Now is the time to take stock of your situation and take action, while you’ve been granted a breather. Call us or email us and and our experienced Philadelphia mortgage foreclosure attorneys will help you figure out how to solve your mortgage problem.
For Others, There May Be Relief through Your Mortgage Servicer or Your State
Some private lenders are granting forbearance for up to 120 days. Contact your lender or servicer to find out if you are eligible for deferred mortgage payments.
State governments are taking the initiative as well. For example, in Pennsylvania, the state Attorney General created a relief program for those with private mortgages, based on the CARES Act federal loan relief. According to the Philadelphia Inquirer, PNC, Citizens Bank, Dollar Bank, First Commonwealth Bank, and OceanFirst Bank are participating in the program. Borrowers can apply for the following relief:
- At least a 90-day grace period for mortgage payments.
- A 90-day grace period for other loans, like auto loans.
- A 90-day window in which late or overdraft fees are not charged.
- A 60-day moratorium on foreclosure, eviction, or motor vehicle repossession.
- If a borrower takes advantage of any federal or state relief, there are no negative credit consequences.
Again, if you’ve taken advantage of any of the relief offered by your lender or servicer or by your state, now is the time to assess your situation and find out what your options are for resolving your mortgage problem. Let us help you figure this out – call today for your free, no-obligation consultation.
Mortgage Forbearance for Landlords Means Eviction Suspension for Renters
For those who own rental property or multi-family property, there is also mortgage relief. The Federal Housing Finance Agency (FHFA) is providing mortgage forbearance for landlords if they agree to suspend evictions for non-paying tenants. This provision helps and protects both landlords and tenants during the COVID-19 crisis in that renters don’t have to worry that they don’t have the income to pay rent, and landlords don’t have to worry that they are not receiving enough rent to pay their mortgage.
How Bankruptcy Might Help You Afford to Keep Your Home
Filing bankruptcy might be the answer for homeowners and renters who:
- Could afford the mortgage or rent if they didn’t have to pay their credit card debt every month.
- Could afford the mortgage or rent if their medical debt was discharged.
- Could afford the mortgage if given a long-term opportunity to catch up with their mortgage, rent, alimony, or child support arrears.
Call us at (215) 278-4519 to schedule your free consultation. Think of this period of temporary mortgage and rent relief as a time to think about how you want your financial future to look. We can help you discover your best option, and take action to make it happen.