As the economic impacts of the coronavirus pandemic begin to hit home, many Americans are worried about how they’ll make their mortgage payments, particularly for those laid off or have lost their jobs.
Fannie Mae and Freddie Mac, the government-sponsored enterprises that back millions of mortgages, this week said loan servicers could suspend payments for up to 12 months for homeowners experiencing a loss of income due to the outbreak of COVID-19.
Other mortgage lenders are likely to follow suit eventually. But if your lender hasn’t set new policies yet and you’re facing an immediate mortgage crisis, there are steps you can take.
First off, and most important, don’t just stop paying your mortgage. Reach out to your lender and work with them to create a payment plan. That’s as easy as making a phone call.
The forbearance period excuses any penalties or late fees against borrowers, and the delays in payment would not be reported to credit agencies, according to Fannie and Freddie.
Most lenders will offer a forbearance. Yet, be aware that a forbearance often only kicks payments down the road. So while you might not be able to pay a mortgage for several months, when that time period is over, you could be expected to deliver all the missed payments as well as the current one in a lump sum. For many people, that could be a devastating blow.
A better bet is to request a mortgage modification. This enables you to skip payments for a set period, then pay them back in a variety of different ways.
Some mortgage companies will spread the missed payments out over several months. Others, in the best-case scenario, will add the missed months to the end of your mortgage, extending the life of the loan, but not creating a financial hardship for you.
In the meantime, foreclosure sales and evictions in Freddie Mac– and Fannie Mae–owned homes have been halted until at least May 17. And delinquent payments will not be reported to credit bureaus.
Lender Mortgage Deferment Plans
Major mortgage lenders are handling deferment requests in different ways. The best idea is to reach out to your lender directly. Their mortgage-assistance websites can also offer some basic information.
Chase says it will review your loan for options including a repayment plan, forbearance, or a loan modification.
Bank of America has paused foreclosure sales, evictions, and repossessions and says it is working with customers.
Wells Fargo Customers can call 800-869-3557 to discuss their options.
TD Bank has specialists standing by at 800-222-5522.
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