How to Utilize the Mortgage Relief Program for Assistance (Detailed Guide)

 According to the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, lenders with federally insured single-family mortgages were required to delay borrowers' payments for a maximum of 360 days if they were struggling financially as a result of the coronavirus pandemic. 

For owners of multifamily apartments with federally backed mortgages, a similar but shorter (90-day) forbearance period was offered.

How to Utilize the Mortgage Relief Program for Assistance (Detailed Guide)

Following the 2020 financial crisis, further legislation, such as the Consolidated Appropriations Act and the American Rescue Plan Act of 2021, as well as presidential executive initiatives, resulted in greater mortgage relief.

Affecting Mortgages

Loans that are covered by the federal government and government-sponsored enterprises (GSEs) are eligible for COVID-19 mortgage relief, which is defined as loans that:

• The Federal Housing Administration insures the property (FHA).
• Section 255 of the National Housing Act provides insurance for home equity conversion mortgages handled by the U.S. HUD, Housing and Urban Development.
• backed by the Housing and Community Development Act of 1992's Section 184 or Section 184A, which prioritizes housing for American Indian families and Hawaiian households.
• The United States Department of Veterans Affairs guarantees or insures it (VA).
• USDA-guaranteed, insured or manufactured (USDA).
• Purchased or securitized by Freddie Mac or the Federal National Mortgage Association.

Residential owners, as well as landlords and other business owners, may hold federally qualifying mortgages. Borrowers of residential mortgages and owners of multifamily properties are subject to different rules.

Find out if your loan is a government supported by using these steps

Here are some steps you can take to determine whether your loan is federally guaranteed, making you eligible for the assistance mentioned above:

• Contact your mortgage servicer by phone or in writing. Your servicer is expected to notify you who owns your mortgage and give you the owner's name, address, and phone number.
• Look it up online. Find out if your mortgage is owned by Fannie Mae or Freddie Mac by using loan lookup tools supplied by those two government-backed companies.
• If you don't know who your servicer is, go to the Mortgage Electronic Registration Systems (MERS) website.

If your mortgage is not backed by the government, what happens?

According to federal authorities, the majority of non-government-backed lenders and loan servicers will implement regulations that are comparable to those imposed by the CARES Act and later laws.

To learn more, get in touch with your loan servicer, find out what programs it has in place to help homeowners affected by the coronavirus outbreak with their mortgages, and then adhere to any instructions you are given.

Despite the fact that the CARES Act does not mandate that private lenders provide mortgage help if you and your lender agree to any kind of loan modification, the rule prohibiting reporting skipped or decreased payments to credit bureaus does apply to oneself.

Mortgage Suspension (Payments Have Been Suspended)

Homeowners with government-backed mortgages who encounter financial difficulty as a result of COVID-19 may forbear their mortgage payments for a period of up to 18 months (including extensions).

• You may seek up to 18 months of total forbearance if your mortgage is guaranteed by Fannie Mae or Freddie Mac. You must have been in an active forbearance plan as of September 30, 2021, to be eligible. Otherwise, a 12-month period of forbearance is permitted.
• You may seek up to 18 months of total forbearance if your mortgage is guaranteed by HUD/FHA, USDA, or VA. To be eligible, you must have requested a first forbearance plan by September 30, 2021. If not, a maximum of 12 months can be granted in forbearance.

The Federal Housing Finance Agency (FHFA) announced an extension of the forbearance deadline on September 24, 2021, but there is currently no new deadline if you are the owner of a multifamily rental property with a loan backed by the federal government.

In the event that the multifamily property is given forbearance, you are required to:

• Tell your renters in writing about the safeguards they have access to throughout the forbearance period.
• While your property is in forbearance, agree not to evict them for nonpayment of rent.
• Allow tenants at least 30 days' notice to quit (for other reasons).
• Accept not to impose late fees or penalties for rent arrears.
• Allow tenants the option of repaying rent over time.

Before agreeing to the terms of any forbearance offered to you under the CARES Act or by a private lender, carefully read them. It is preferable to add the missed payments to the end of your mortgage term. 

Some lenders, particularly those in the private sector, may have specific conditions that demand a balloon payment and only delay payments for a short period of time.

Discrimination in mortgage financing is banned. There are actions you may take if you believe you have been discriminated against because of your race, religion, gender, marital status, use of public assistance, national origin, handicap, or age. Filing a report with the Consumer Financial Protection Bureau (CFPB) or HUD is one such step.

The Best Way To Ask For Patience

To obtain forbearance as a homeowner with a federally backed mortgage loan, contact your loan servicer (the business to which you make payments). 

You do not need to provide substantial documents; all you need to do is confirm your financial difficulty over the phone. Your initial forbearance period might last up to 180 days. You can extend your forbearance for an additional 180 or even 360 days, depending on when your first forbearance began.

To be eligible for forbearance relief, landlords of multifamily units must have been current on payments as of February 1, 2020. Landlords should submit an oral or written request to their servicer, who can authorize the initial 30-day forbearance, with future extensions of up to 60 days, if necessary.

Possibility of ending forbearance

The CARES Act gives you the right as a borrower to terminate forbearance at any time. This applies if you have a government-backed loan on a single-family home or a multifamily complex.

What is the purpose of patience?

There are no additional penalties, interest, or late fees

• Your servicer cannot charge you any penalties, interest, or fees that would not have been incurred if you had made your payments on time and in full during any forbearance period given to you.
• During any forbearance period provided to the landlord, landlords may not charge renters any fees or penalties for late rent payments.

There will be no credit bureau reporting

• If you are enrolled in one of the forbearance programs, lenders are not allowed to report missed or late payments to credit bureaus. This means that not making full payments or not paying at all will have no effect on your credit score.

There are no foreclosures or evictions

• Through September 30, 2021, there would be no federally-backed mortgage foreclosures or evictions.

Extra Help

Depending on your needs, you could be eligible for more help once your forbearance term is through. Work with your servicer to restart regular payments if feasible. If you still require assistance, inquire with your service provider about additional choices. 

This might involve lowering your monthly payments or modifying your loan in some other way.

You cannot be reported to credit bureaus as "not current" on a loan if you and your lender reach an agreement on a loan modification.

Homeowners And Landlords Can Get Financial Assistance

The two concepts are distinct from one another. Forbearance just postpones the eventual day when halted payments must be resumed. The Homeowner Assistance Fund and the Emergency Rental Assistance program are funded by the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021.

Fund for Homeowner Assistance

In order to avoid mortgage defaults, foreclosures, loss of utilities, and eviction of homeowners, the Homeowner Assistance Fund (HAF) was established. The utilization of funding is prioritized for those who have faced the most adversity.

On November 12, 2021, guidance on how to use the fund was amended to extend deadlines for applying for money to December 15, 2021, for specific places.

The funds can be utilized for the following purposes:

• Mortgage payment assistance
• Insurance for homeowners
• Payments for utilities
• Other specific goals

How to Apply for Homeowner Assistance Funds

Funds for homeowner aid are being provided to states for redistribution to homeowners. The United States Department of Treasury has offered help to states in building their respective HAF programs.

After your state's HAF plan has been authorized and its system is operational, you will seek funding from it. Meanwhile, the National Council of State Housing Agencies' Homeowner Assistance Fund website includes a map that shows the current condition of each state's HAF.

Program for Emergency Rental Assistance

Renters who are unable to pay their rent or utilities are eligible for Emergency Rental Assistance (ERA). States, US territories, local governments, American Indian tribes, Tribally Designated Housing Entities, and the Department of Hawaiian Home Lands get the funding directly. 

These organizations may use ERA monies to support tenants through current or newly established rental assistance initiatives.

How to Apply for Rental Assistance in an Emergency

You must apply for ERA assistance through the appropriate state or agency since the Treasury distributes ERA monies to states and other bodies. 

To assist with this, the Treasury has launched a website to assist renters and landlords in locating rental assistance services in their region. To learn how to apply for assistance or to assist your tenants in doing so, use it to direct yourself to the appropriate state or other authority.

Is there a Mortgage Stimulus Program?

There isn't a stimulus plan for mortgages guaranteed by the government. If you encounter an ad for a "new 2021 mortgage stimulus payment" or anything similar, it's either a well-crafted mortgage refinancing advertisement or pure spamming.

How has President Biden been addressing the mortgage crisis?

"Shortly after taking office, the Biden-Harris Administration extended the foreclosure moratorium and mortgage forbearance enrollment period for homeowners with government-backed mortgages to give help to suffering homeowners," according to a White House news statement.

Furthermore, as part of President Biden's American Rescue Plan, $9.961 has been allocated to the Homeowner Assistance Fund to encourage loan modifications and payment reduction choices on all federally backed mortgages.

When the forbearance period expires, can you modify your loan?

In accordance with a new regulation published by the Consumer Financial Protection Bureau (CFPB), lenders must permit borrowers who meet specific criteria for hardship to modify their loans in a quick and easy manner. From August 31, 2021, until December 31, 2021, this regulation has been in effect.

After the forbearance period has been over, will my home be foreclosed upon?

Although most homeowners' forbearance time has finished, the CFPB and the Biden Administration have implemented additional restrictions to avert a major surge of imminent foreclosures. Lenders are expected to provide borrowers with a variety of alternatives, including:

• Enabling debtors to restart mortgage payments and adding any missed payments to the principal.
• Reduce their monthly mortgage payments with a simplified loan modification.
• Making it possible for borrowers to sell their houses.

Borrowers still have further limitations in place through December 31, 2021, if none of those alternatives are practical for them.

The borrower must have abandoned the property, have not responded to the lender's inquiries for more than 90 days (and be more than 120 days delinquent on payments), or have been more than 120 days delinquent on their mortgage prior to the pandemic in order for the lender to begin the foreclosure process.