Congress provided some relief to Nebraska homeowners facing a hardship due to the Coronavirus (COVID-19). Depending on the circumstances, there may be some mortgage relief during this time.
Mortgage Relief
Congress provides a homeowner relief from their monthly mortgage payment by requesting a forbearance with their mortgage company if:
- The homeowner has a federally backed mortgage loan on a single residence or multifamily real estate;
- The homeowner has experienced a financial hardship due, directly or indirectly, to the Coronavirus emergency;
- Regardless if the homeowner is delinquent or not.
What is a Mortgage Forbearance?
A forbearance is an agreement made between the homeowner and mortgage lender in which the lender agrees not to exercise its legal right to foreclose during a period where a homeowner does not make monthly mortgage payments.
What kind of mortgages apply?
You must have a federally backed mortgage loan in order to qualify. You have a federal mortgage if:
- Your mortgage is insured by the FHA (FHA Loan);
- Your mortgage is guaranteed under the Housing and Community Development Act (HUD Loan);
- Your mortgage is guaranteed or insured by the Veterans Administration (VA Loan);
- Your mortgage is guaranteed, insured, or made by the Department of Agriculture (USDA Loan);
- Your mortgage is purchased or securitized by the FHLMC or FNMA (Freddie Mac or Fannie Mae Loans)
You can check your mortgage loan paperwork or your mortgage company to determine whether your mortgage is federally backed.
How long of a forbearance can I get?
A homeowner can request a forbearance up to 180 days. During the 180 day forbearance period, the homeowner can request an additional 180 days of relief.
Will I be charged fees? What about my credit report?
During the forbearance period no fees, penalties, or interest beyond what would have been due had the homeowner paid timely can accrue on the account.
Your credit report should not be negatively affected and will reflect that the mortgage is current during the forbearance period.
What happens at the end of the forbearance period?
The payments that were suspended during the forbearance period become due. During the forbearance, however, your mortgage lender will work with you to make a permanent plan to maintain or reduce the monthly payment. This may involve a deferment (or deferral), refinance, or a loan modification.
What is a mortgage deferral?
A mortgage deferral, or deferment, is an arrangement where a mortgage lender agrees to postpone payment requirements to some point in the future, usually at the end of the loan. Depending on the circumstances this could result in adding the number of months to the loan that were deferred or forborne or a lump sum balloon payment representing the total of the missed monthly payments.
How do I apply? What do I have to provide?
Applying for the Coronavirus emergency forbearance is quite easy. You must submit a request to your servicer and affirm that you are experiencing a financial hardship due to the coronavirus (COVID-19) pandemic. No other documentation is required.
Most servicers have made it easy to apply by listing the request at the top of their website.
What if I do not have a federally backed mortgage?
Even if you do not have a federally backed mortgage, there may still be relief. Major mortgage companies are provided similar programs to provide their borrowers. The best thing to do would be to check your mortgage company’s website to see what programs they offer.
If the pandemic is causing you a hardship and preventing your ability to pay your mortgage, there are options to help. Additionally, if you are suffering from other debt along with the hardship of mortgage payments, a bankruptcy may help you put your affairs in order and come out of the pandemic better off than you are now. If you’re in this situation a proactive approach would be to reach out to a bankruptcy attorney and learn your available options.