During this designated disaster period which began on March 13, a borrower with a federally backed loan can request forbearance through the loan servicer.
A federally-backed loan means that it’s either guaranteed or insured by the Federal Housing Administration, Department of Veterans, Department of Agriculture or purchased or securitized by Fannie Mae or Freddie Mac. Once the request is submitted, forbearance is granted for a period of up to 180 days at the request of the borrower. No fees, penalties or interest beyond the amount scheduled can be accrued on the borrower’s account. The servicer cannot request any proof beyond the borrow’s attestation to a financial hardship caused by COVID-19. The servicer of a Federally backed loan also cannot initiate the foreclosure process for not less than a 60-day period beginning on March 18.
|It’s important to know the facts when considering forbearance. The Consumer Financial Protection Bureau has produced this educational video.|
Protections for Multi-Family Property Owners: During the covered period, all of the protections extend to homeowners are being extended to owners of multi-family properties with Federally-backed loans as well. The loans are aimed at providing relief to the building owners that may be facing hardships — possibly due to the inability of tenants to pay. Unlike single-family homeowners, in this instance, multi-family building owners need to document the financial hardship they are facing and can request forbearance for up to 30 days. Renter protections are built into this section of the bill, guaranteeing that the building owner receiving forbearance cannot evict or initiative eviction of tenants based on nonpayment of rent or charge any late fees to tenants due to late payment of rent.
Increased Tenant Protections: For the next 120 days, the owners of any dwelling that participates in any housing program covered by various acts — including the low-income housing tax credit program, National Housing Act, Homeless Assistance Act, National Affordable Housing Act, rural housing voucher program and others — cannot begin any action to initiate eviction proceedings to re-take possession of a dwelling for nonpayment of rent, or charge any fees or penalties related to nonpayment of rent. The protections also apply to tenants of any building that’s owned by a lessor with a federally-backed mortgage, including through the HUD.
Credit Protections: The stimulus package amends the Fair Credit and Reporting Act to allow more leeway for consumers that come to agreements with lenders on deferring, making partial payments, modifying a loan, forbearing delinquent amount and utilizing any other relief. It’s a measure designed at not allowing the tanking of credit scores of millions of Americans suddenly finding themselves out of work due to coronavirus. If the lender and a consumer impacted by coronavirus come to an agreement on any of the aforementioned accommodations — with respect to one or more payments — and the consumer makes either the agreed-upon payment or is not required to make the payment, then the account must be reported to credit agencies as current. If the account was delinquent before the noted period, that status must be maintained.
As always, I’m here to help whether it’s Real Estate related or not. I hope you and your family are staying well.