Newsletter: Help for struggling homeowners: U.S. is extending pandemic protections
Good morning. I’m L.A. Times Business reporter Andrew Khouri, filling in for Rachel Schnalzer to bring you our weekly newsletter. Here’s a bit of relief for people struggling with their mortgage payments.
In March 2020, the federal government rolled out a series of measures to protect homeowners during the COVID-19 pandemic.
The policies allowed people with federally backed mortgages — about 70% of the market — to delay mortgage payments for up to a year if they had a pandemic-related financial hardship. And they barred foreclosures on homes with loans backed by the federal government for a limited amount of time.
The measures have succeeded in keeping many struggling borrowers in their homes during a pandemic that’s killed more than 514,000 Americans and caused millions to lose their jobs.
The federal government, under both the Trump and Biden administrations, has repeatedly extended the foreclosure moratorium. It also has repeatedly extended the deadline for homeowners to sign up for forbearance programs that let them delay mortgage payments without penalty.
In recent weeks, the White House and the Federal Housing Finance Agency announced the latest extensions and — for the first time — said some homeowners will be allowed to delay their mortgage payments for longer than 12 months.
Here’s more information about forbearance and protections from foreclosure.
Can I miss more than 12 months of mortgage payments without penalty?
It depends on what type of mortgage you have and when you enrolled in your forbearance program.
If you have a loan backed by the Federal Housing Administration, U.S. Department of Agriculture or U.S. Department of Veterans Affairs, you can now miss up to 18 months of payments if you have a pandemic-related financial hardship — and if you enrolled in forbearance by June 30, 2020.
If you have a loan backed by government-controlled mortgage companies Fannie Mae or Freddie Mac, you can also miss up to 18 months if you have a pandemic hardship and if you enrolled in forbearance by Feb. 28, 2021.
If you have a loan not backed by a federal entity, there aren’t federal rules for delaying your payments, so ask your mortgage servicer what is available.
If I’m enrolled in forbearance, is the pressure off?
Forbearance programs for any type of loan let you delay payments, but you must eventually pay back what you missed.
If you have a federally backed loan — through the FHA, USDA, VA, Fannie Mae or Freddie Mac — there are multiple repayment options, and you aren’t required to pay everything back in a lump sum when your forbearance ends.
Can I still enroll in forbearance?
If you have an FHA, USDA or VA loan and have a pandemic-related hardship, you can request a mortgage forbearance until June 30 of this year and can miss up to 12 months of payments.
There isn’t currently a deadline to apply if you have a Fannie Mae- or Freddie Mac-backed loan. As with FHA, USDA and VA loans, new enrollees are limited to a maximum of 12 months of missed payments.
To sign up, contact your mortgage servicer. For more information about applying, visit the Consumer Financial Protection Bureau’s website.
What if I don’t have a pandemic-related hardship?
Forbearance programs were around before the pandemic, but Congress set up a special COVID-19 forbearance option given the scale of the crisis.
To qualify, you just need to declare you are “experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency,” but the law doesn’t provide a definition beyond that or specify the scale of the hardship you need to face. A layoff or furlough could qualify, as could large medical bills from catching COVID-19 or increased child-care costs with kids out of school, among other things.
If you have trouble paying your mortgage for a reason that’s not related to the pandemic, forbearance still could be an option. Ask your servicer what is available.
What about foreclosures?
For people with loans backed by the FHA, VA, USDA, Fannie Mae or Freddie Mac, foreclosures — regardless of whether the homeowner has experienced a pandemic-related hardship — are banned until July 1.
Mortgage servicers cannot foreclose on borrowers who are in forbearance programs, but the foreclosure moratoriums also protect people who never enrolled in forbearance or who exited forbearance and then fell behind on payments.
Will these deadlines and timetables change again?
It’s possible. The Trump and Biden administrations have extended deadlines to enroll in forbearance and have lengthened foreclosure moratoriums as the pandemic continued. Although COVID-19 cases have declined recently, vaccine rollout has been slow, and there’s concern about new, more contagious coronavirus variants.
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Have a question about work, business or finances during the COVID-19 pandemic, or tips for coping that you’d like to share? Send us an email at email@example.com, and we may include it in a future newsletter.