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It's not possible to obtain mortgage forbearance more than once under the federal COVID-19 financial relief programs, but you may be able to extend your forbearance for a period of time. Other resources are also available for homeowners in pandemic-related financial distress. It's important to act quickly to take advantage of these opportunities, and to plan for the inevitable expiration of these relief programs.
Can You Extend Your Mortgage Forbearance?
Among the many provisions of the 2020 pandemic relief legislation known as the CARES Act was a mandate requiring servicers of mortgages guaranteed by the federal government to grant borrowers mortgage forbearance. They could do this by accepting reduced mortgage payments or even suspending them altogether for a period of up to 180 days, with an option to extend them another 180 days as needed.
That mandate has been extended, giving borrowers the option to request up to two more 90-day forbearance periods, for a maximum total of 540 days (roughly 18 months) of forbearance relief. These provisions protect roughly 70% of all single-family home mortgages in the U.S.
The U.S. Consumer Financial Protection Bureau (CFPB) has created an online clearinghouse for information on COVID-19-related relief and assistance options for homeowners. It includes:
- A lookup tool that tells you if your mortgage is backed by the federal government and how to contact your mortgage servicer if it is.
- Resources on requesting mortgage forbearance, extending existing forbearance plans and working with lenders to avoid foreclosure.
You Can Still Request Mortgage Forbearance
If you haven't already submitted an initial request for mortgage forbearance, you can do so until September 30, 2021, if your loan was issued through the Veterans Administration (VA), U.S. Department of Agriculture (USDA) or Federal Housing Administration (FHA).
If your mortgage is guaranteed by Fannie Mae or Freddie Mac, there is no deadline for submitting an initial forbearance request.
How to Get Mortgage Forbearance Extensions
The CARES Act initially entitled borrowers with mortgages backed by the federal government (FHA Loans, USDA Loans, VA Loans) or guaranteed by Fannie Mae or Freddie Mac up to 180 days (roughly six months) of mortgage forbearance, with an option to extend forbearance up to 180 more days.
As many as two additional extensions of 90 days each are available to homeowners who obtained mortgage forbearance under the CARES Act, adding up to a total maximum of 540 days (about 18 months) of forbearance for those who meet these eligibility requirements:
- If your mortgage is backed by Fannie Mae or Freddie Mac, you must have been in an active forbearance plan as of February 28, 2021, to qualify for one or more additional extensions.
- If your mortgage is backed by the FHA, USDA or VA, you must have requested a forbearance plan on or before June 30, 2020, to be eligible for additional extensions.
If you are eligible for extended forbearance on your government-backed mortgage, you must proactively request extension(s) from your loan servicer—forbearance is not extended automatically.
If your mortgage is not backed by the federal government, you may still be eligible for a forbearance extension. According to the CFPB, many loan servicers are offering customers with non-guaranteed loans forbearance comparable to what they provide borrowers with government-backed mortgages. To learn what options are available, reach out to your mortgage servicer.
Foreclosure Protections Are Still Available in Some States
Along with mortgage forbearance mandates, the CARES Act imposed a temporary moratorium preventing mortgage lenders from foreclosing on borrowers with federally backed mortgages during the COVID-19 crisis. That moratorium was extended several times, but its most recent extension was struck down by the U.S. Supreme Court—a move that allowed foreclosures to resume.
However, the foreclosure moratoriums that some states and municipalities have instituted still stand. Some of these protections extend to all mortgage lenders, not just issuers of government-backed loans.
Prepare Your Finances for the End of Relief Measures
Mortgage forbearance and foreclosure moratoriums won't be extended forever. If they've bought you some breathing room in the face of pandemic-related income reductions, now is a good time to plan for their inevitable expiration.
Forbearance Repayment Options
If you're in mortgage forbearance, it's important to work with your mortgage servicer to figure out how you will repay the sum you were permitted to forgo paying during your forbearance period. Options include the following:
- Repayment plan: Under this option, your regular mortgage payments are increased temporarily (typically for no more than 12 months) until you repay the amount left unpaid during your forbearance period.
- Payment deferral: With this arrangement, the sum you owe (and interest charges that apply to it) are added to the end of your mortgage term. You must pay it in full as the final payment on your mortgage or pay it off when you sell the house, whichever comes first.
- Loan modification: In a mortgage modification, your loan servicer issues you a new loan for the sum of the amount you owe from forbearance and your outstanding mortgage balance, lowering your monthly payments (and typically increasing your total interest costs) by extending the payback period by several months or years.
- Lump sum: At the conclusion of your forbearance period, you must repay all the money you were spared paying during forbearance, in one single payment.
If you're behind on mortgage payments and concerned that foreclosure could begin as soon as applicable moratorium(s) expire, connect with your mortgage lender or servicer as soon as possible to try to work out alternatives to foreclosure:
- Sell the house. Housing markets are highly competitive in many parts of the country right now, so it may be possible to sell your home and use the proceeds to pay off the remainder of your mortgage (including the back payments you owe).
- Pursue a short sale. If your home's market value is less than what you owe on your mortgage, your best option for getting out from under it may be a short sale. Under this arrangement, which requires permission from your mortgage lender, you can sell the house at market value and turn all of the proceeds over to the lender. Depending on how the deal is negotiated, the lender may forgive the amount you still owe on the original mortgage, or arrange for you to pay back some or all of that remainder over time.
Your credit report will reflect a short sale by listing your mortgage account as settled for less than the full amount owed, which can have negative consequences for your credit scores.
How to Get Help
If you're worried about how you'll be able to resume payments following mortgage forbearance, or if you're otherwise concerned about the possibility of losing your home to foreclosure, the following federal resources may offer help:
- The U.S. Department of Housing and Urban Development (HUD) has a team of housing counselors who can offer guidance and help you understand the options in your state to help you stay in your home.
- The CFPB provides a directory you can use to locate an attorney in your state who can help you navigate the legal processes around foreclosure.
- If you feel your mortgage lender or servicer has mismanaged your forbearance or foreclosure proceedings, you can submit a complaint to the CFPB and the bureau will follow up with an investigation.
Watch Out for Scams
Criminals are always ready to take advantage of people who are financially vulnerable, so be careful about offers from "experts" who claim they can make your mortgage difficulties go away:
- Verify the identity of anyone who calls, emails or texts you claiming to represent your mortgage lender or mortgage servicer. Insist on calling them directly, and do so using a publicly available phone number or email address taken from your mortgage paperwork.
- Monitor your credit reports closely to make sure your mortgage payments are being reported accurately, and to help you detect any unauthorized credit activity by criminals who manage to obtain your personal information.
Federal mortgage forbearance and foreclosure protections must eventually come to an end. With careful preparation, you can help put them, and the COVID-19 pandemic, behind you.