With the majority of the country still under quarantine, many Americans are facing a financial crisis. Stimulus checks have helped, but for many it won’t be enough to keep up with expenses. With citizens out of work and waiting for their jobs to come back, many homeowners are concerned about whether they will be able to pay their mortgage in the coming months. You can make a positive difference in the lives of your clients by making sure they’re aware of the Federal Housing Administration’s Disaster Relief program. Under this initiative, the Department of Housing and Urban Development has financial assistance programs to help those in need. Here is a basic breakdown of the options and services available.
Who is eligible for this aid?
Only borrowers who are already delinquent on their mortgages are eligible for immediate relief. If a homeowner is current on their payments, but may be unable to make further payments, they should contact their lender about waiving late fees, deferment, or forbearance.
If your client has already missed payments, the stipulations to qualify for assistance are fairly straightforward. The Department of Housing and Urban Development has broken it down into three basic groups:
- If you live within the boundaries of the declared disaster (in this case, the entire U.S. is affected), you are already covered by a 90-day foreclosure moratorium.
- If someone in your household has been affected by the virus and has died, is missing, or is incapacitated, you qualify for a moratorium.
- If you are unable to make payments on your mortgage because you were financially impacted by COVID-19, you qualify for a moratorium.
Basically, if someone in the homeowner’s household has been financially impacted (reduced hours, unemployed, sick, hospitalized, etc.) due to COVID-19 and they already missed payments on their mortgage, they qualify for assistance. However, it’s important to be aware that this program is only eligible to those with federally-backed mortgage loans, including mortgages and deeds processed through Fannie Mae and Freddie Mac, those insured by HUD, the VA, or the USDA, or loans made directly through the USDA. If you or your client is unsure about whether they qualify, they should contact their lender for clarification or reach out to a HUD-approved counseling agency.
Should my clients be worried about foreclosures?
As a result of the disaster relief program, FHA lenders are not able to foreclose on any borrowers who have been affected by COVID-19, even if they are behind on their loan payments. However, it’s still important to inform your clients that they need to reach out to their lenders immediately if they believe they will not be able to pay their mortgage. Once lenders know that a borrower has been affected by the pandemic, they can begin processing information to stop foreclosure action during the moratorium period.
Are lenders asking for proof of unemployment or illness?
With the sheer number of borrowers applying for assistance, many lenders are not requiring proof of hardship. Just in case, advise your client to obtain a copy of their layoff notice or a letter from their doctor stating the reason they’re not able to work.
Should homeowners ask for a deferment or forbearance?
When discussing options, it’s important for your clients to understand the difference between a deferment and forbearance. Make sure your clients understand the pros and cons of each option. If they’re unable to make payments, it’s in your client’s best interest to ask their lender to defer payments rather than asking for forbearance.
Deferring a loan means pausing the payments for a certain period of time. The amount of time the loan is frozen will be added on once payments resume. Loan forbearance requires the borrower to make up the payments they missed once the forbearance period is over. The lender may agree to spread the amount due over multiple payments or they may request the full amount at the end of the forbearance period. Borrowers will also be accruing interest during this time.
It’s unclear what will happen with the economy in coming months, so use this time to support your clients with the best information possible. Join the Secrets of Top Selling Agents Facebook Group for the latest news and business tips to keep your business going during these uncertain times.