COLUMBUS, Ohio — Ohio Attorney General Dave Yost and 34 other attorneys general today recommended action to help homeowners in letters sent to the Federal Housing Finance Agency (FHFA) and the Department of Housing and Urban Development (HUD).
“There are so many people seeking relief under the federal program, it is overwhelming the system,” Yost said. “These commonsense rules will help streamline the process and ensure uniformity.”
The bipartisan coalition applauded federal efforts to suspend evictions and foreclosures during the COVID-19 pandemic and expressed appreciation for additional forbearance and foreclosure relief provided by the CARES Act. The coronavirus-reliefÂ
As part of the CARES Act, FHFA and HUD have already adopted streamlined processes for borrowers affected by COVID-19 to enter into forbearance plans, which allow borrowers to pause mortgage payments for a limited time. Currently, once the forbearance period ends, borrowers are asked to either repay the missed payments in a lump sum or enter into a more permanent loss mitigation solution.
Because an unprecedented number of borrowers will need help at essentially the same time, the letters recommend moving the forborne (or missed) payments to the back of the loan term. That would allow immediate relief for homeowners and reduce borrower confusion and concern, while limiting the strain on the mortgage servicing industry.
The letters make three recommendations:
- FHFA and HUD should issue guidance revising their forbearance programs so that forborne payments are automatically placed at the end of the loan’s term;
- FHFA and HUD should expand eligibility for disaster relief loss mitigation programs; and
- FHFA and HUD should clarify that the moratorium on foreclosures and evictions applies to all aspects of the foreclosure or eviction process. That includes issuing pre-foreclosure and acceleration notices, posting or publishing any notices, filing or proceeding with motions beyond continuances, or taking any other foreclosure or eviction action during the moratorium.
The protection of the CARES Act applies only to federally backed mortgages, which make up approximately 62% of the mortgage market. Borrowers who are not covered should contact their mortgage servicer (the company to which they send their monthly payment) to determine whether it is offering any relief during the pandemic.
Are you eligible for relief?
If you have a federally backed mortgage, you have the right to request a forbearance for up to 180 days if you have a financial hardship due to the coronavirus pandemic. You also have the right to request one extension for up to another 180 days.
The Consumer Financial Protection Bureau (CFPB) offers a guide to coronavirus mortgage relief options on its website. To determine whether you are eligible for a forbearance plan or other assistance:
- First find out who services your mortgage and whether you have a federally backed mortgage. See tips from CFPBor go to FannieMae or Freddie Mac’s look up tools.
- If you do not have an eligible mortgage, your servicer or financial institution may offer relief to borrowers. Call your servicer and let them know your situation immediately. Ask them what forbearance or hardship options may be available.
Keep in mind that forbearance does not erase what you owe. You still must repay any missed or reduced payments in the future.
In addition to Ohio, the coalition includes attorneys general from California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, Washington, West Virginia and Wisconsin.
