As we are continuing to see the effects on our national and local economies, many of us are finding ourselves furloughed or laid off, sheltering-in-place and unable to make our mortgage payments. Fortunately, the federal government, as well as the State of Florida, has provided a safety net for both homeowners and renters.
The Federal CARES Act
The federal CARES Act, signed into law last month, gives borrowers who have federally-backed loans the right to forbearance, ie. skipping their mortgage payments. Under the provisions of the Act, any borrower with a federally-backed mortgage (FHA, VA, USDA, Fannie Mae or Freddie Mac) who is experiencing financial hardship may request a forbearance period.
According to the CARES Act, loan servicers can approve forbearance for a specified time depending on the mortgage. Borrowers who need more time at the end of that period must ask for an additional forbearance period, up to a year. Borrowers must contact their mortgage servicer to initiate this forbearance.
At the end of the forbearance period, the servicer of the mortgage must give the borrower several repayment options, not just repaying as a lump sum. Some servicers may offer the option of adding the missed amount to the end of the loan, extending that loan by the number of months missed. In some of these cases, with current rates as low as they are, borrowers may have the option to refinance the loan to reduce their payments.
Suspension of Evictions and Foreclosures
The Department of Housing and Urban Development has also been ordered to suspend any evictions and foreclosures through the middle of May. This action not only prevents new foreclosure actions but also suspends any actions that were currently in process as of March 18, 2020.
As of April 2, 2020, Ron DeSantis, Governor of Florida, signed an executive order suspending foreclosures in the State of Florida for 45 days. This will help those who have mortgages that are not government-backed and cannot take advantage of the CARES Act.
Taking Your Own Situation Into Consideration
The Consumer Financial Protection Bureau has advised that borrowers should consider their own financial situation before taking any steps toward forbearance.
They have suggested that if a borrower is able to make their mortgage payments, they should continue to do so. If there is an immediate problem, the borrower should first go to the servicer’s website for specific information before calling as call wait times can be lengthy.
It’s also important for borrowers to fully understand the terms that they are agreeing to repay any skipped payments after the forbearance period ends. These terms will be different from servicer to servicer.
Do You Need Assistance?
At Florida State Mortgage Group, many clients have been affected by these unprecedented times. They may be able to help with short or long-term financial relief with refinancing depending on your situation. You may contact Florida State Mortgage Group at (954) 359-3000 to get your questions answered.