forbearance

More Options for Homeowners Facing Hardship During Pandemic

Many families can't pay all their bills right now. Some might be able to delay one of the biggest -- mortgage payments -- for up to a year.

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Homeowners in a financial crunch because of pandemic-related income loss may be able to defer payments on their mortgages.

The bank term is "forbearance." Now, federally-backed loans have new forbearance flexibility, thanks to the CARES Act.

Right now, you're able to request no payments for 180 days -- that's six months. If you're still facing a financial hardship due to COVID-19, you can request an additional 180-day extension; in total, a one-year pause.

This applies to Fannie Mae, Freddie Mac, FHA, VA, or USDA loans. Lots of home loan borrowers send their money to a private company each month, but those loans might still be federally-backed. It's pretty easy to find out: call the company that takes your mortgage payments, and ask if the U.S. government "owns" your loan. If they say yes, the door is open to forbearance help.

Pausing payments now does not erase your debt. You'll have to pay back what you owe later, and you'll have to work with the company that collects your payments to determine how that will happen.

For example: if you pause mortgage payments for the full 12 months, will you owe the entire 12 months' payments all at once, as a lump sum, when you resume payments next year? Or, are payments tacked onto the end of the loan, making a 30-year mortgage a 31-year mortgage?

Alternatively, will those 12 months of payments be spread out over the remainder of your mortgage, meaning every payment is just a little higher?

It's critical to iron everything out in writing. None of this is automatic. You must call in and request help.

Privately-held home loans might offer similar flexibility. They're not required to by federal law, but if you pick up the phone and explain your situation, your lender might work with you.

The federal government has set up this new housing website to help you learn more about your options.

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