The Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) gave Americans lifelines to economic assistance during the bleakest days of the worldwide pandemic. The CARES Act was signed into law on March 27, 2020. Nearly two years later, many aspects of the Act are ending, including mortgage forbearance. If you worry over your mortgage, we at The Page Law Firm are pleased to provide facts, useful information, and reassurance. You are never alone in tackling your financial challenges.
Texas homeowners who, due to the COVID-19 national emergency, have fallen behind in mortgage payments were (and in some instance may still be) eligible for mortgage forbearance, a process in which mortgage servicers or lenders allow mortgagees to do one of two things:
- Temporarily pay the mortgage at a lower payment, or
- Pause paying the mortgage altogether
Forbearance does not mean living in a house with no strings attached. As the Consumer Financial Protection Bureau (CFPB) points out, you will eventually have to pay the payment reduction or the paused payments. You are given a reprieve, not a free home. Your creditors may forgive some time, but they will not forget the loan.
Where Are We With This?
As with many government programs, ferreting out the meaningful details of the CARES Act requires real patience and persistence. The end date for mortgage forbearance depends on when you entered into an agreement with your lender to forebear the payments. If you applied for mortgage forbearance with your lender in 2020 or 2021, you may be facing the end of the program.
Under the CARES Act, homeowners with conventional, FHA, VA, or USDA loans could request an initial home loan forbearance for up to six months, followed by another six-month extension, for up to one year of total forbearance. Some loans offer forbearance up to 18 months.
Can I Still Apply?
If by some Texas-sized miracle you have been able to sustain mortgage payments throughout this pandemic, you may be surprised to learn you can still apply. As the law is written, so long as the COVID-19 national emergency is in effect, the program is in effect.
President Biden extended the National Emergency on February 24, 2021, for one additional year. Given three conditions, we can expect the declaration to be renewed yet again in February:
- The arc of the Omicron variant — The Centers for Disease Control (CDC) is expecting a huge surge in cases in the weeks ahead
- Delta's deadly ravages — This variant is more contagious and causes more severe illness than the original strain
The COVID-19 emergency is very likely to last many months longer, meaning applications can still be made for mortgage forbearance. As CFPB indicates, if your loan is backed by HUD/FHA, USDA, or VA, you can still request an initial COVID hardship forbearance as long as the COVID-19 National Emergency is in place.
Better news, too, if your loan is backed by Fannie Mae or Freddie Mac: no deadline exists for requesting an initial forbearance.
In all cases, your first step in seeking mortgage forbearance is to contact your lender, the servicer of your mortgage. Be wary of scams and myths that have arisen around these government-sponsored relief programs. Fannie Mae offers an entire page of facts debunking the myths, and the CFPB watches and warns about COVID-19 scams.
If you availed yourself of mortgage forbearance and payments now loom, you have other options. One of your best, first options is to talk to a bankruptcy attorney to see if Chapter 7 or Chapter 13 bankruptcy can protect your home and allow you to remain in it.
Strategic use of bankruptcy can put your home “off limits” to creditors, forestall foreclosure, and give you time to recover financially. Chapter 7 bankruptcy can stop foreclosure actions and Chapter 13 bankruptcy can stop foreclosure and restructure your debt. Both methods are completely legal, extremely helpful, and welcome salvation to many Texans.
This national COVID-19 crisis has frayed everyone's nerves. Bankruptcy helps put distance between grumpy mortgage providers and you. If you have received harassing telephone calls, dunning letters, or other abuse from creditors, bankruptcy and a qualified bankruptcy attorney can end all that. You can find financial and emotional relief amid this ongoing worldwide health emergency. And, you can stay in your house.
Contact our experienced bankruptcy attorney today. Timing is crucial in stopping the foreclosure process, especially amid the COVID-19 pandemic. You may also telephone us at (214) 618-2101 to schedule your complimentary consultation. Our Frisco, Texas bankruptcy firm serves Collin County, Denton County, The Colony, Little Elm, Prosper, Celina, Plano, Carrollton, Lewisville, Flower Mound, and McKinney. We look forward to protecting your rights and your home.