The COVID-19 crisis has forced millions of Americans out of their jobs, and even those entitled to unemployment benefits are struggling to pay their bills. The good news is that there's some relief on the table for homeowners who are unable to pay their mortgages because of the ongoing crisis -- specifically, the option to put their loans into forbearance and suspend their monthly payments for up to a year.
Of course, mortgage lenders aren't just granting this flexibility out of the goodness of their hearts -- federal regulators are forcing lenders to agree to up to 12 months of forbearance, and that extends to all mortgages guaranteed by Fannie Mae and Freddie Mac. But that forbearance isn't granted automatically -- homeowners are required to reach out to their lenders and ask for it, which is already proving to be a challenge.
Lenders are hard to reach -- and aren't being as generous as you'd think
You may have heard that laid-off workers are struggling to claim unemployment benefits because online filing systems are jammed. Well, the same holds true for desperate homeowners who are eager to get in touch with their lenders -- they're having trouble getting through to a live person who can help them.
But that's just the tip of the iceberg. Some homeowners are being told by their lenders that while they will be allowed to put their mortgages into forbearance, they'll also be required to come up with several months' worth of payments all at once when that forbearance period ends. And that's hardly helpful, since it's unlikely that those who are struggling to make their payments right now will magically come into enough money to fork over months of payments in the near future.
Of course, this doesn't apply to all lenders, and some are going out of their way to make the ongoing crisis easier on homeowners -- namely, by tacking on any payments that are missed during forbearance to the end of borrowers' mortgages, thereby allowing borrowers to resume the monthly payments they were already used to making without having to worry about coming up with a lump sum.
If you're unable to pay your mortgage because of the COVID-19 crisis, reach out to your lender immediately and see what options are on the table for you. But make sure you understand exactly what leniency you're being given, and whether it comes with strings attached.
And if you don't like the terms you're being offered, negotiate, and keep calling your lender back to see if it's changing its tune. There are already reports of lenders shifting their repayment policies in response to borrower complaints, and this is one situation where it pays to make a stink if doing so prevents you from falling behind on your mortgage and putting your home at risk.