By Sabrina Karl
The CARES Act passed last month offers some relief to homeowners struggling to pay their mortgage due to coronavirus impacts. The tricky thing is that, so far, the relief is not one size fits all. So talking to your lender sooner rather than later is imperative.
The CARES Act has so far provided two kinds of mortgage relief: a moratorium on any foreclosures until at least the middle of May, and the option for homeowners suffering income or job loss due to the pandemic to postpone mortgage payments for 6-12 months.
But whether you qualify for this relief, and when you’d need to repay the missed payments, depends on who owns your mortgage. The CARES Act applies to federally backed mortgages, which account for about 70% of U.S. home loans. Meanwhile, non-government loans may offer their own relief terms.
But it’s not always obvious which type of loan you have, as federally backed mortgages can be serviced by a bank. In addition, banks also service loans they own themselves. So the first step is figuring out who actually owns your mortgage.
The second confusing issue is that, so far, uniform rules have not been specified on when homeowners must pay back their postponed payments, which is called forbearance. So while some lenders are willing to tack those payments onto the end of the loan, others are requiring a balloon payment after 90 or 180 days.
Then there is also the wild card of not knowing whether Congress will approve or extend additional mortgage relief. Only passing time will answer that question.
As a result, if you think you may need mortgage relief, it is critical that you call your lender as soon as possible to begin the conversation, with long phone wait times being an additional reason to not delay.