Anyone who is experiencing a loss of income due to the National Emergency and is unable to make their regularly scheduled mortgage payments are directed to contact their mortgage servicer. Regrettably, most if not all mortgage servicers are operating with reduced staff and it is very difficult to contact them. If you have automatic withdrawal you may want to stop it immediately. If you are lucky and make contact with the servicer, you will need to submit an application for mortgage assistance and you may be given a forbearance from 3 to 12 months. After a forbearance is completed, the servicer will determine if you qualify for a loan modification, and if approved, the unpaid payments are essentially added to the principal balance and the loan is re-amortized over 30 or 40 years. If, however, you still do not have sufficient income after the forbearance period is completed, you may be denied a modification and the account may go into foreclosure. This is what happened after the financial crisis of 2008.
If your mortgage is state regulated then in NY, you may qualify for a three month forbearance, but again, you need to submit an application for assistance with your mortgage servicer. I understand that the NYS Department of Financial Services has required all state regulated mortgage companies to waive late fees and not report any negative credit history to the credit bureaus. If you have a federally insured mortgage (FANNIE MAE or FREDDIE MAC) then you may qualify for a forbearance up to 12 months. I understand that late fees are waived and all negative credit reporting is suspended. If you do ultimately receive a loan modification, it is likely that the modification will be reported to the credit bureaus. Lastly, the application process for a forbearance is lengthy (3 months on average) and you will need to provide your tax returns, bank statements, all sources of income and hardship letter. After the forbearance period is over, you will need to apply for a mortgage modification which is almost identical to the forbearance application and the process will likely be another three months before a final decision is made. Note: if you have large sums of money and or assets, you may not qualify for a modification. My best advise is to save as much money as you can during these challenging times because whatever you save can be used to pay down any arrears if your are denied a modification later on. I wish you all well and bless us all!!!
Below are useful sites to further assist you in determining whether your mortgage is federally insured with FANNIE MAE or FREDDIE MAC. Stay Safe everyone!!!!
https://www.fhfa.gov/Homeownersbuyer/MortgageAssistance/Pages/Coronavirus-Assistance-Information.aspx
https://www.ffiec.gov/consumercenter/default.aspx
https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202003241
May 25, 2020 UPDATE:
FANNIE MAE and FREDDIE MAC are now offering a new deferral option which will permit borrowers in forbearance due to Covid-19 pandemic to defer their missed mortgage payments (up to one year while on forbearance) and they will not have to pay the missed payments until the end of their mortgage term (the mortgage maturity date). In other words, if a borrower/homeowner's mortgage has 20 years remaining then the deferred payments will become due immediately after the remaining 20 years. If the borrower/homeowner sells or refinances the mortgaged property before the maturity date then the deferred payments become due at the time of the sale or refinance. lenders are required to offer this deferral option beginning July 1, 2020. As of now, it is unclear if the borrower/homeowner will be required to submit a formal application for the deferral. It is also unclear if the deferral applies to the entire missed payments including escrows or if it only applies to the principal and interest portion of the mortgage payments. Obviously, any forbearance will result in an escrow shortage and it is unlikely that Fannie Mae or Freddie Mac will be reaching into its coffers to pay the taxes while allowing borrowers to defer the entire missed mortgage payments until their mortgage maturity dates. See below link for Fannie Mae's official press release:
https://www.fanniemae.com/portal/media/corporate-news/2020/covid-payment-deferral-7018.html
June 18, 2020 UPDATE: Fannie Mae and Freddie Mac are extending the temporary three-month forbearance for up to 12 months to homeowners who continue to reside in their homes that have mortgages insured by Fannie Mae and Freddie Mac. Homeowners should contact their loan servicers to make sure that the initial three-month forbearance is extended another three-months. Failure to make the request may cause problems with the loan account. After the additional three month extention, homeowners can decide if they need additional extensions (totaling no more than 12 months). At the end of the forbearance terms, homeowners can request that the principal and interest portions of their missed payments during the forbearance term be added to the loan balance. The servicers are not to charge any additional interest or late fees and the sum for the missed principal and interest will be payable at the end of the mortgage maturity date or upon refinance or transfer. There will be no formal application process for this unless a homeowner cannot make payments due to financial reasons and in those cases, a homeowner will need to submit a formal loss mitigation application to the lender to see if the mortgage can be modified. If, however, a homeowner lacks sufficient income to resume mortgage payments then it is likely the servicer will deny an application for loan modification. It is still too early to know how things will play out and whether the current pandemic will result in additional considerations that prompt servicers to offer additional relief to homeowners...so hang in there!
Missed tax and insurance escrows during the forbearance term(s), however, must be paid back after the last forbearance term ends (maximum of 12 months), and the missed escrows can be paid down and/or paid back over a one year period or whatever period the servicer permits. This will result in a larger mortgage payment upon homeowners resuming the regular monthly mortgage payments after the last forbearance term ends. It is therefore recommended that homeowners save as much money as they can to pay down or pay off the missed escrows.
October 27, 2021 UPDATE: By now, many borrowers who were in forbearance have already entered into some type of agreement with their mortgage servicer to resume regular monthly mortgage payments. Many other borrowers, however, are still adversely affected due to the pandemic and must communicate this with their mortgage company or servicer ASAP who in turn will likely review borrowers for some form of assistance if they can continue making payments via a "flex" modification or other repayment plan that doesn't typically require submission of any formal application. Those who cannot make the new payments will be forced to sell their homes or continue living in their homes until they are divested of their title. It certainly is a sad commentary.
Those who are unable to resume payments should seek out the advice of experienced foreclosure counsel to provide guidance and direction during these challenging times.
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