There is no doubt about it. COVID-19 is one of the worst economic disasters this country has faced. Fortunately, we are a resilient nation. We can bounce back from storms such as this. Many people will be helped along the way by the various entities offering housing relief options for struggling homeowners who may be failing to make ends meet due to COVID-19.
Whether you are unemployed or underemployed due to COVID-19 or are one of the millions of small business owners that simply could not remain solvent, there are various housing relief options available. They just may prevent you from losing your home as a result of the pandemic raging on our shores.
What Are My Options?
You may not feel like you have a lot of options when it comes to saving your home in light of your current financial situation. Relief might seem a foreign concept. However, the federal government and various lenders are stepping in to provide assistance to families in this time of great need.
While some are providing humanitarian assistance, others are more practical in nature. The housing crisis of 2007-2009 looms large in recent memories for large and small lenders alike. No one wants to go through unprecedented foreclosures. As a result, new options are available to help you stay in your home. Whether you are a homeowner or a renter, there are protection options available for you.
- Relief for Federally or GSE-Backed Mortgages. The first wave of relief offered by the CARES Act offers homeowners protection against foreclosure for a period beginning March 18, 2020, and extending through February 28, 2021. As the surge of Coronavirus is sending people who had just returned to work back home again in some states, this protection may be extended. However, it does not relieve the debt, it simply provides time for you to climb your way out of debt.
- CARES Act Mortgage Forbearance. You may request a forbearance from government-backed mortgages for up to 180 days (with an extension for up to 360 days).
- COVID-19 Payment Deferral. This plan defers missed payments (without penalties, fees, or negative credit bureau reports) to the end of your loan to qualified borrowers.
- Loan Modifications. You can work with your mortgage lender to make loan modifications that permanently change certain terms of your loan. They might include extended payoff terms, lower interest rates, etc. to make your loan more affordable.
- Repayment Plan. This plan spreads the remaining debt over an extended period allowing you to catch up what is owed.
- Mortgage Reinstatement. The best option financially speaking, is often the most difficult for borrowers affected by COVID-19. It requires that you pay off your entire past due balance and resume normal mortgage repayments.
Each of these options offers some pros and cons, but all offer options for homeowners to find relief from overdue payments.
Protections for Rental Housing Relief
For renters who have fallen upon hard times due to COVID-19, there are protections to prevent landlords from evicting you. This protection went into effect beginning March 27, 2020, through January 31, 2021. There is a possibility this gets extended in later legislation. Some states offer additional security beyond what the federal government provides.
What you need to know about this protection is the following:
- It does not prevent eviction actions initiated prior to March 27, 2020 from moving forward.
- It only prevents non-payment related evictions and does not prevent evictions related to lease violations.
Your rent payments are still due. The protections only exist to buy you time. If you are experiencing hardships, it is always wise to seek state and local assistance and make arrangements with your landlord. You do not want to get too far behind. The ultimate goal is to avoid eviction once the restrictions are lifted.
How Do I Qualify?
For most of these programs, you only need to have the right kind of loan and take action to get started. The best place to start is with a call to your mortgage lender or landlord (according to your circumstances). Understanding options available can help you make informed decisions about the future of your mortgage.
Even with protections in place to provide housing relief options for COVID-19 and the financial devastation in its wake, you are still ultimately responsible for paying your rent and mortgage. These protections offer only temporary relief. It is up to you to repay your mortgage as promptly as possible and/or make arrangements with your lender for long-term relief.