CARES Act Mortgage Forbearance Q&A

I answer your questions about Mortgage Forbearance under the CARES Act.

Under Section 4022 of the CARES Act, those with federally backed mortgages can apply for mortgage forbearance for 180 days. They can also extend the forbearance for another 180 days.

Here are some of the questions I've received about this mortgage program:

Q: How do you know if your mortgage is federally backed?

A: Here are the types of mortgages covered:

U.S. Department of Housing and Urban Development (HUD)
U. S. Department of Agriculture
USDA Direct
USDA Guaranteed
Federal Housing Administration (FHA) (Includes reverse mortgages)
U.S. Department of Veterans Affairs (VA)
Fannie Mae
Freddie Mac

You can also use the online lookup tools from Freddie Mac and Fannie Mae:

https://www.knowyouroptions.com/loanlookup

https://ww3.freddiemac.com/loanlookup/

Q: What happens to the escrow portion within your monthly mortgage payment in the event you are able to defer payments for 6 months or a year?

A: The CARES Act doesn’t address escrow accounts. Several websites have stated that mortgage companies will make the payments during forbearance, but we can’t rely on that. You’ll need to discuss this with your mortgage servicer.

Q: Rob, so are you saying that if I defer my monthly mortgage payments for the next 12 months, I may not have to pay those missed mortgage payments back?

A: No. You will have to pay them back. This is mortgage forbearance, not forgiveness. How you'll have to pay it back is unclear.

—Fannie Mae: "Repayment options following your forbearance, including a repayment plan to catch up gradually or a permanent loan modification that aims to maintain or reduce your monthly payment" https://www.knowyouroptions.com/covid19assistance

—Freddie Mac: "Offering loan modification options that lower payments or keep payments the same after the forbearance period.” http://www.freddiemac.com/about/covid-19.html

—CFBP: "With some forbearance programs, you may owe all of your missed payments at one time, or additional payments at the end of the mortgage might be required, so make sure you’re familiar with the final terms.” https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/

The key is to discuss this with your mortgage servicer before accepting forbearance.

Q: Will forbearance hurt my credit?

A: No. Sec. 4021—Credit Protection During COVID-19—If your account was current before the forbearance period started, the mortgage company must report the account as current.

Q: How do you "certify" that you have been negatively impacted by the current financial situation? What proof is required?

Sec. 4022(c)(1): "Upon receiving a request for forbearance from a borrower under subsection (b), the servicer shall with no additional documentation required other than the borrower’s attestation to a financial hardship caused by the COVID–19 emergency”

1. If you can’t pay some or all of your mortgage due to COVID-19, contact your mortgage servicer.
2. Understand your options at the end of the forbearance period.
3. Get it in writing.
4. Once in forbearance, routinely check your credit.

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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (https://amzn.to/3by10EE)

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.

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