If you obtained a mortgage forbearance early on thanks to the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, your initial payment suspension may be about to expire. To get additional forbearance relief, you must request it before your initial forbearance period ends—forbearance extension under the CARES Act is not automatic. The act was signed into law on March 27, 2020, which means the first forbearance agreements could start to expire by the end of October.
The CARES Act grants homeowners with federally backed mortgages who are financially affected by the coronavirus pandemic an up-to-180-day temporary suspension (forbearance) of all or part of their mortgage payments. The CARES Act also provides for an up-to-180-day forbearance extension, provided the borrower requests it before the initial forbearance expires.
- The CARES Act provides up to 360 days of full or partial mortgage payment forbearance for anyone with a federally backed home loan.
- Initial forbearance can be for up to 180 days with one 180-day extension.
- You must request both the initial forbearance and the extension—neither one is automatic.
- To obtain initial forbearance or a forbearance extension, contact your loan servicer.
- For most people forbearance freezes delinquency, which stops foreclosure.
- Many private lenders also offer COVID-19-related forbearance, although rules and conditions vary.
Loans Eligible for Forbearance Under the CARES Act
CARES Act forbearance (and foreclosure avoidance) applies to mortgage loans backed by the federal government and sponsored enterprises, defined as loans:
- Insured by the Federal Housing Administration (FHA)
- Insured under section 255 of the National Housing Act, which involves home equity conversion mortgages administered by the U.S. Department of Housing and Urban Development (HUD)
- Guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992, which targets American Indian families and Hawaiian housing
- Guaranteed or insured by the Department of Veterans Affairs
- Guaranteed, insured, or made by the Department of Agriculture
- Purchased or securitized by the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae)
Request Your Extension Through Your Loan Servicer
If your federally backed loan forbearance is about to expire and you are still not in a position to begin full (or any) payments, start by contacting your loan servicer. This is the company that sends you a monthly statement and collects your payments. The name and contact information for your servicer should appear on your monthly statement.
Your servicer should notify you about your options before the expiration of your current forbearance. If not, make sure you contact your servicer to assert your need for an extension.
You can contact your servicer by phone, email, or the servicer’s website. Before you make contact, it is a good idea to visit the website for updates on all mortgage relief options. The simple process of obtaining a forbearance extension is spelled out in the CARES Act:
“Such forbearance shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower.”
The CARES Act requires only that you request an extension and mandates that you “shall” receive one.
Get Everything in Writing
While the legislation does not even require that your request be in writing, the Consumer Financial Protection Bureau (CFPB) says that once you secure forbearance you should “ask your servicer to provide written documentation that confirms the details of your forbearance agreement and that you’re clear on what the terms are.”
Just as with your original forbearance request, keep in mind that:
- To receive the extension, you do not need to submit additional documentation other than your claim to have a pandemic-related financial hardship.
- During the time you are in forbearance there will be no additional fees, penalties, or interest (beyond scheduled amounts) added to your account.
- You can shorten the forbearance and resume making payments at any time.
If you have not yet requested your initial forbearance under the CARES Act, you can still do so as long as the coronavirus national emergency declared on March 13, 2020, is still in effect.
Private Lender Forbearance Extensions
If you don’t have a federally or GSE-backed mortgage, but you have a forbearance agreement with your private lender, the lender may or may not offer an extension or other mortgage relief. As is true with a government-backed loan, you need to contact your servicer before your current forbearance expires.
Since the rules that apply to government-backed loan forbearance will not apply in your case, you need to pay attention to the conditions that will be imposed when your current forbearance expires. Some private lenders, for example, require an immediate balloon payment of all past-due payments and interest. If that’s the case with your lender and you simply cannot make such a payment, talk to your servicer right away to find out if an extension or other remedy is available. You may also want to check with your state government to explore relief options that may be available there.
Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau (CFPB) or with the U.S. Department of Housing and Urban Development (HUD).
While You Are in Forbearance
While you’re in forbearance, your focus should be on protecting yourself and preparing for life after mortgage relief by doing the following:
- Keep written documentation on hand that details the conditions of your mortgage relief including forbearance.
- Monitor monthly mortgage statements for errors.
- Stop or change auto-payments for your mortgage to conform to your forbearance agreement.
- Monitor your credit report for errors and to ensure your servicer is reporting your status accurately. You can monitor credit reports weekly for free through April 2021.
- Before your forbearance or forbearance extension ends, plan with your servicer to repay any amount you owe.
Forbearance vs. Foreclosure
The relationship between forbearance and foreclosure is complicated and often misunderstood. Forbearance is a way to temporarily deal with your inability to pay your mortgage and, in most cases, to avoid foreclosure while you are in the forbearance period.
Essentially all government-backed mortgages are in a foreclosure moratorium until at least Dec. 31, 2020. This applies whether you are in forbearance or not.
The rules to qualify for forbearance (and avoid foreclosure) when it comes to federally and GSE-backed mortgages are broad and permit you to enter forbearance if you are 30, 60, 90, or more days behind in payments—or even if your lender has started foreclosure proceedings against you.
During forbearance, your status is “frozen,” hence “no foreclosure.” This is only temporary, of course. Once forbearance ends you will be subject to foreclosure as the law allows.