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Can't Make Your Mortgage Payment Due To COVID-19? Know Your Rights To Forbearance


If you are unable to make your monthly mortgage payments due to lost income during the Coronavirus epidemic, you are not alone. In fact, your situation is incredibly common during this unprecedented time, and is likely through no fault of your own.

Fortunately, many financial institutions and government entities want to support borrowers by offering forbearance, or the ability to delay mortgage payments, due to lost income. You will have different options for forbearance depending on your mortgage lender and/or servicer:




Federally-Backed Mortgages


If your mortgage is backed by Fannie Mae, Freddie Mac, FHA, or another government-sponsored entity, the recent Coronavirus Aid, Relief, and Economic Security (CARES Act) gave you the following forbearance rights:

  • Six months forbearance if income is lost due to COVID-19, with the option to extend for an additional six months
  • No penalties, additional interest, or late fees added to your account during forbearance
  • Your credit score will not be hurt by establishing a forbearance plan
Visit www.makinghomeaffordable.gov to find out who owns your mortgage and learn more about these options.



Private Banks and Servicers


The Illinois Department of Financial and Professional Regulation (IDFPR) has issued guidelines urging financial institutions to offer all of the options listed above, for at least 90 days, even if their loans are not federally-backed. However, no legal directive has been issued to require this. Fortunately, many major lenders are taking proactive steps to prevent foreclosures by offering their own forbearance options to borrowers. These include Bank of America, Citibank, Ally, Capital One, and others. NHS is monitoring the current relief plans offered by different banks, and our counselors can help you prepare for a conversation with your lender through a secure, remote one-on-one meeting. NHS staff has observed that many servicers are starting with a three-month forbearance plan and giving borrowers the opportunity to call at the end of the plan to get a three-month extension if needed. Some servicers offer the option to do this on their website, so it is worth checking online before making your call to them.




How to Ask for Forbearance


Regardless of which bucket you fall under, you should always call the servicer or lender on your monthly statements as soon as you know you won’t be able to make your full payment. You should never be penalized for simply calling to discuss your options. Especially during this difficult time, many financial institutions will want to work with you to find a payment plan that works for all parties involved. To ask for more time to make your payments, you may need to address a few items with your servicer:

  • Why you are currently unable to make payments
  • Whether the situation will be temporary or permanent
  • Details about your income, expenses, and cash reserves

Be prepared to ask these questions when you call:

  • What are my options to temporarily reduce or suspend my monthly payments through forbearance, loan modification, or other means?
  • Can you waive any late fees, penalties or additional interest on my account?
  • Can you suspend any negative reporting to credit bureaus regarding my account, as recommended by state and federal regulatory agencies?

Once you reach an agreement with your servicer, make sure to get it in writing. Ask you servicer how soon your statements will reflect the new terms of your forbearance plan. Additionally, you may want to take the following actions:

  • Watch your monthly mortgage statements to ensure they match the agreement you have with your lender
  • Monitor your credit score to ensure it is not negatively affected, if this is part of your agreement
  • If your income is restored sooner than anticipated, call your servicer to amend your agreement and resume monthly payments as soon as possible



Finally, be aware of potential scams and predatory practices that often rise during times of financial distress. According to the Consumer Financial Protection Bureau, signs of a scam include high up-front fees, asking you to sign over your property title, telling you to make payments to someone other than your servicer, or asking you for personal information such as a credit card number.
Our counselors are available to help you at any time through remote, secure sessions that are completely free of charge. They are available at 773-329-4111 and via e-mail.