Mortgage Relief Options During the Pandemic

an image of a house with virus looking balls floating around

As the COVID-19 pandemic drags on, more Americans are facing financial uncertainty. According to a recent U.S. Census Bureau housing survey, over 8 million homeowners are behind on their mortgage payments. Help is still available to many of them under a federal law that guarantees temporary relief to borrowers with federally or Government Sponsored Enterprise (GSE)-backed mortgages.

The Consumer Financial Protection Bureau (CFPB) has created multilingual resources to educate homeowners about their mortgage relief options, including borrowers covered by the Coronavirus Aid, Relief and Economic Security (CARES) Act and those who are not. Below is an overview of those options. Read on to decide if they are right for your situation.

What is the CARES Act?

The CARES Act is a $2.2 trillion economic stimulus bill that was signed into law on March 27, 2020 to help offset the impact of the coronavirus pandemic.

Which homeowners does it help?

Provisions of the CARES Act protect Americans who purchased their home with the help of a Veterans Affairs (VA) loan, Federal Housing Administration (FHA) loan, U.S. Department of Agriculture (USDA) loan, or a Fannie Mae or Freddie Mac loan, and are experiencing financial hardship due to COVID-19.

What type of mortgage relief does it provide?

The CARES Act temporarily prevents eligible borrowers from losing their home to foreclosure and entitles them to a COVID-19 hardship forbearance.

What is forbearance?

Forbearance allows borrowers to temporarily reduce or stop paying their monthly mortgage without penalty due to financial hardship. Forbearance does not forgive debt; it gives borrowers time to stabilize their finances. Any reduced or deferred mortgage payments must be repaid (see options below) after the forbearance period.

How do I prove I’m experiencing financial hardship resulting from COVID-19?

No proof of financial hardship is required for borrowers covered by the CARES Act. Simply contact your mortgage loan servicer to explain your situation and you will be entitled to protection.

It is imperative that you contact your mortgage loan servicer (the company listed on your mortgage statement) to request forbearance. You must do so by the deadline, if applicable, and before you stop paying your mortgage.

When is the deadline to request forbearance under the CARES Act?

The deadline to request forbearance for homeowners with a VA, FHA or USDA home loan is June 30, 2021. There is currently no deadline for those with a mortgage backed by Fannie Mae or Freddie Mac.

How long can I defer my mortgage payments under the CARES Act?

Eligible borrowers receive up to 180 days of initial forbearance and may request an extension for up to an additional 180 days, which provides up to 12 months of deferment. Additional protections have also been announced in recent days to address ongoing hardship:

VA, FHA & USDA borrowers

    • On February 16, 2021, the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA) extended moratoriums on single-family evictions and foreclosures to June 30, 2021.
    • They also announced that borrowers who have been on a COVID-19 forbearance plan on or before June 30, 2020 may request up to six months of additional mortgage payment forbearance, in three-month increments, which provides up to 18 months of deferment.
    • HUD extended the deadline for the first legal action against FHA borrowers and the reasonable diligence time frame to 180 days from the date of expiration of the foreclosure and eviction moratorium.

Fannie Mae & Freddie Mac borrowers

    • On February 25, 2021, the Federal Housing Finance Agency (FHFA) extended moratoriums on single-family evictions and foreclosures to June 30, 2021.
    • It also announced that borrowers who are on a COVID-19 forbearance plan on or before February 28, 2021 may request up to three months of additional mortgage payment forbearance, which provides up to 18 months of deferment.

How do I request forbearance?

Contact your mortgage loan servicer. If you don’t know what type of mortgage you have or who owns it, you can start here. Once you find out, call them to explain your situation and ask what mortgage relief options are available. If you can’t get through at first, keep trying. Mortgage servicers are experiencing very high call volume due to demand.

The CFPB and Federal Bureau of Investigation (FBI) are warning of scammers who are impersonating government officials and contacting homeowners to collect personal or financial information they claim is needed to release COVID-19 financial assistance. The government will NEVER ask you to do this. Always call your mortgage loan servicer directly using a trusted phone number; never use one provided by an unsolicited caller, visitor, letter, email or text.

What are my options for repayment?

It depends on your mortgage loan servicer. The CFPB recommends asking the following questions when requesting forbearance to make sure you understand your financial obligations.  

  1. Will I owe the entire unpaid amount in a lump sum? If so, will it be at the end of the forbearance period or at the end of the loan term?
  2. Can my loan term be extended so missed payments are added to the end of the mortgage?
  3. Will subsequent monthly payments be higher for a while to make up the deferred amount?

If you have a VA, FHA, USDA, Fannie Mae or Freddie Mac home loan, you will not have to pay back the full amount that was deferred right away, unless you want to. If your financial situation improves before the end of your forbearance period, you may want to contact your mortgage servicer and resume making regular payments to limit what you owe in the future.

What if I don’t qualify for help under the CARES Act?

Any borrower facing financial hardship can request a forbearance on their loan. Even if you don’t have a federally or GSE-backed mortgage, you may have relief options available through your mortgage loan servicer or from your state. Both the public and private sectors are working hard to keep people in their homes and avoid mass foreclosures.

Additional Resources

For more detailed information about mortgage relief options, visit the CFPB’s Mortgage Relief webpage.