DENVER — Homeowners can get up to a year of mortgage relief due to the coronavirus pandemic but may find themselves owing a huge lump sum at the end of the agreement.
The CARES Act passed by federal lawmakers in March allows homeowners impacted by the coronavirus pandemic to put off their mortgage payments for up to a year.
To apply, homeowners first need to find out if they have a federally-backed loan.
“Fannie Mae and Freddie Mac have lookup options on their websites, so you can plug in some information to see if you have a federally backed loan,” said attorney Andrea Bopp Stark, with the National Consumer Law Center. “You can look at your mortgage statement to see if you pay FHA insurance, or if you have your closing document still, you can look at the HUD statement and see if there is a 13-digit HUD number on that.”
Those with federally-backed loans can reach out to their mortgage provider and ask for a forbearance. This is a temporary break from payments.
“At the end of that temporary period you are going to have to pay that money back, and that’s the catch,” Bopp Stark said. “You may have to pay it back in a lump sum or your servicer may be able to work with you to pay it back over time.”
She recommends trying to come up with an agreement on payment with the bank now, so that homeowners are not stuck owing thousands of dollars in payments at the end of the forbearance.
“If they can’t afford their mortgage now, how are they going to come up with thousands of dollars – three, six, 12 months of a lump sum payment?” Bopp Stark said.
Some banks are allowing homeowners to add what is owed to the end of the loan or payment plans.
Getting in contact with your mortgage company can be difficult with so many homeowners trying to reach financial agreements.
“I would just be patient. Put your phone on speaker and let it sit there. I had a friend do that for three hours and eventually got through,” she said.
If you cannot get ahold of your mortgage company you can write them a request for information letter. Here is a sample letter to follow.
For more information on consumer protections during the COVID-19 pandemic. Visit the National Consumer Law Center’s website.