Consumer Protection During the Coronavirus Pandemic
By: Financial Hotline
Spring 2020 (Vol. 38, No. 1)
Struggling to make payments on your mortgage, rent or student loan? Go to ConsumerFinance.gov for up to date information and important resources.
MORTGAGE RELIEF OPTIONS: There are no freebies for homeowners. If you can pay your mortgage, pay it. If you cannot, there are some options that will help you avoid foreclosure. Be aware that none will eliminate any of your debt, the best options will defer your payment to a later date.
If you are struggling to pay, your first step is to find out who services your mortgage. This is who you send your payments to each month. Check your monthly statement for contact info. Then contact your lender and say “I am struggling to make my payments due to hardship resulting from the pandemic. I’d like to go over what options you have to assist me.” It’s also important to find out if your mortgage is federally backed (This includes Fannie Mae, Freddie Mac, FHA, VA, and USDA.)
If you have a federally backed mortgage, and your hardship is due to the pandemic, the Cares Act gives you the right to request a forbearance for up to 180 days. You also have the right to ask for an extension for up to an additional 180 days. You cannot be charged additional fees, penalties or added interest (beyond the already scheduled amount). You do not have to supply documentation to qualify other than your claim that the pandemic caused your hardship.
Forbearance does not mean the payments are forgiven or erased, it just pauses or reduces your payments until you can get back on track. Your lender may offer several options, so be sure you are clear when the deferred payments will become due. Options include:
- Paying all missed payments back at one time at a future date
- Spreading missed payments out over several payments
- Added as additional payments or a lump sum due at the end or payoff of your mortgage
RENTERS: If you are struggling to pay rent due to the pandemic and you are renting from an owner who has a federally insured or Government Sponsored Entity (GSE)- backed mortgage, live in federally subsidized housing or get a federally subsidized grant or voucher, you cannot be evicted for nonpayment of rent between March 27 and July 25, 2020 due to the CARES Act. Many state and local governments have also paused evictions because of the impact of the coronavirus pandemic.
Under the CARES Act, additional restrictions may apply for a property with a federally or GSE-backed mortgage. Landlords who receive forbearance relief under the CARES Act cannot evict their tenant(s) or charge late payment fees or penalties while they are receiving forbearance relief. After their forbearance ends, they must give you a 30-day notice to vacate and let the notice expire before making you leave.
If you live in federally-subsidized housing and your income has fallen, contact your housing authority to talk about income recertification. If you rent from a private company or landlord, a payment agreement may help you avoid eviction once the moratorium is over.
Again, this doesn’t mean your rent is eliminated. If you can pay your rent or a portion of it, your best financial move is to pay. All these protections are a short term fix, and payments will still be due once these terms expire.
STUDENT LOANS: The Cares Act, provides automatic suspension of principal and interest payments on federally-held student loans through September 30, 2020. These suspended payments will count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met. If you are experiencing hardship or a loss of income and can’t afford your payment for your non-federally held loans, you should contact your servicer as soon as possible. They can discuss options with you.