Friday, April 24, 2020

Mortgage Forgiveness During the Coronavirus Pandemic

Will I face foreclosure if I cannot pay my mortgage during the COVID-19 shut down?

In a desperate attempt to slow the spread of the coronavirus, entire cities and states have issued mandatory stay at home orders, which require anyone who does not work in an essential industry to stay home besides essential travels. Currently, nine out of ten Americans are under a stay at home order, totaling some 306 million Americans. The result has been millions of Americans out-of-work. Entire industries have been shut down and decimated by the country’s efforts to flatten the curve. Thus far, nearly ten million people have filed for unemployment. Tens of thousands of small business owners have applied for various loans and grants being offered in an attempt to keep them afloat.

If you are one of the millions of Americans out-of-work, you may be wondering what will happen if you cannot make your mortgage payment this month and in the uncertain months to follow. Anticipating that millions of homeowners will not be able to pay their mortgage in the coming months, the federal government has taken action, though it does not yet protect everyone. Our Dayton, Ohio Chapter 13 bankruptcy attorneys discuss the various options for mortgage forgiveness due to the coronavirus below.

Mortgage Payment Forgiveness Under the CARES Act

The recently enacted CARES Act offers some relief for certain homeowners. The CARES Act orders federally backed mortgage holders to suspend the payments of borrowers who have lost income due to the coronavirus for up to 12 months. Per the CARES Act, anyone with a federally backed mortgage who is suffering financial hardships due to the coronavirus can request a forbearance of up to 180 days, with the option to extend it for an additional 180 days. You will need to submit the request to your mortgage servicer. You will not be required to provide any proof or documentation concerning your financial hardship.

Further, during the forbearance period, you will not be charged any additional penalties or interest, nor will the late payments be reported to credit agencies. Your federally backed lender cannot initiate foreclosure or eviction up until May 17, 2020.

The first step for homeowners struggling to pay their mortgage will be ascertaining whether they have a federally backed loan. Contact your service provider for more information. If you have a non-government backed mortgage, the government has not ordered relief, but you should reach out to your mortgage provider to attempt to come to an agreement that could keep you in your home.

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