You worked hard to save money for a down payment on a home. You’ve faithfully paid your mortgage every month since you closed on your home loan and suddenly – the coronavirus hit. 

Perhaps you’ve lost your job, or fear you may be out of work soon. Suddenly, you’re staying awake at night, worried that the bank will foreclose on your home. 

Don’t jump too far ahead of yourself. You can miss some payments (although you’ll have to catch up eventually).

According to a survey released on April 13, 2020 from the Mortgage Bankers Association, a total of 3.80 million homeowners are now in forbearance plans, or agreements to temporarily suspend mortgage payments for up to one year. 

The association’s chief economist Mike Fratantoni expects that number to grow at a “rapid pace.”

How to get a forbearance plan

You’ll need to prove that you have lost income because of the pandemic. The CARES ACT, the emergency aid package Congress passed last month, directs lenders holding federally backed mortgages to suspend borrowers' payments for up to 12 months if:
 

• The mortgage holder(s) have lost work due to the pandemic.
• The mortgage holder(s) sick and can’t work.
• The mortgage holder(s) us caring for a sick family member and therefore can’t work.
• The mortgage holder(s) have experienced a loss or significant decline in income due to the pandemic.

However, you can’t just stop paying and assume your lender will automatically know you want to be enrolled in a forbearance plan.

 You must request forbearance from the lender. Some lenders have online forms to start the process. Others request that you stat the process by calling them. 

What does a “federally backed loan” mean? 

The CARES ACT only applies to homeowners with federally backed mortgages. 

To find out whether your loan is backed by the federal government, contact your mortgage lender or servicer.  They’re required to tell you who owns your mortgage. If you don’t want to wait on hold, use these tools: 

• Fannie Mae 
• Freddie Mac  
• Mortgage Electronic Registration Systems  

Will not paying my mortgage hurt my credit score?

The number one question we are being asked at LawChamps is whether the failure to make mortgage payments will negatively impact your credit score. 

If you request forbearance, your credit score will NOT go down. 

What should I ask the lender about? 

Make sure you understand the terms of your agreement. Forbearance is a short-term solution. Lenders probably won’t agree to anything longer than one year. You have the right to discontinue the forbearance at any point during the agreed-upon time frame. 

At the end of the forbearance period, you’ll need to pay the mortgage amounts that were reduced or suspended. Your lender will help you determine the best option for you, some of which are: 
 

• Repaying a bit of what you owe every month until the total amount is paid in full. 
• Paying everything you the first month the forbearance period ends. 
• Extending the length of your loan. For example, if you were in year ten of a 30-year mortgage, the lender may agree to extend your mortgage if you can’t pay the lump sum. 

This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.