Mortgage Relief From COVID-19

Fannie Mae and Freddie Mac announce relief for borrowers who are experiencing hardship resulting from the COVID-19 (Coronavirus), unemployment, reduction in regular work hours or illness, which has impacted their ability to make their monthly mortgage loan payments. Fannie & Freddie are not your mortgage holder. Rather, they are the source of funds or guaranty of mortgage money for the majority of home loans in the U.S. The link below provides the details to the service providers (your lender). However, it’s not written for the average borrower to simply follow. Of course not, why make it simple? This is my summary after reading through. Your mortgage company will have their own summary which will dictate that course they will take. The 1st step is to be proactive and start early. To keep you in the best position possible, reach out to your mortgage lender before you are late with a payment.

Step 1: Determine if the borrower is eligible

Do they have a hardship resulting from COVID 19 and has it impacted their ability to pay. This can be for primary residences, secondary residence or investment properties. (using the disaster relief provision, which they have determined as an appropriate provision for the COVID 19 pandemic)

Step 2: Loan modification or forbearance plan terms

Be careful for what you are requesting. A deferred payment means that the payment is postponed for a short period. Then, all the past due amounts are due. This would not be ideal for most people as you have a loss of income and do not have a source for a lump sum payment to make up the balance. A Loan Modification request can change or modify the payments to the end of your loan, extending the Note date. A Forbearance Plan can be put in place to make up the payments over an extended time frame.

The Servicer (your lender) is authorized to offer up to 6-month or shorter increments. The Servicer can offer the borrower monthly payments that are reduced or suspended for the term of the forbearance plan term. The forbearance and repayment plan cannot exceed 36 months. I read this to mean the most amount of time you can repay the deferred payment is 36 months, your lender may have it over a short period. The forbearance plan is issued in a form called an Evaluation Notice. (The government has to have a special title for everything).

Step 3: Forbearance plan

The forbearance plan is complete when the mortgage is brought current through reinstatement. The borrower is approved for another workout option, is paid in full.

Note: The Servicer meets the requirements for suspending reporting to the credit bureaus. https://singlefamily.fanniemae.com/media/22006/display… CAUTION: People try to take advantage of others during times of crisis. Make sure you are only speaking to your mortgage holder. Fraudulent companies are already sending out e-mails and ads trying to take advantage. Be cautious about who you speak to.