Looking for Covid-19 Mortgage Assistance? Federal Regulations are being expanded to provide COVID-19 Loss Mitigation protections.
Behind on your mortgage due to Covid-19? Are you afraid of facing foreclosure? There’s hopeful news. The Consumer Financial Protection Bureau has added protections for you that govern how a mortgage servicer can provide Covid-19 Mortgage Assistance. It has added two new specific COVID-19 loss mitigation rules. There is a sunset on some of these new provisions and they expire on December 31, 2021.
COVID-19 Mortgage Assistance Options
A recent change has implemented Covid-19 Mortgage Assistance protections for consumers. A mortgage servicer can offer covid-19 mortgage assistance if it receives an incomplete loss mitigation package (the documents that are requested by the bank to review you for a loan modification, short sale, or other work out options) when:
- The Covid-19 Mortgage Assistance offered by the servicer gives an option that allows you to delay paying covered amounts (a forbearance), you refinance your loan, you sell your property, the mortgage matures (reaches its final due date), or, if insured by the FHA, the lender’s insurance on the loan terminates.
- The Covid-19 Mortgage Assistance offered by the servicer may not charge interest for any agreed delay in payments. There can be no additional fees owed by you in connection with the Covid-19 Mortgage Assistance you are offered. Additionally, all existing late charges, penalties, stop payment fees, or similar charges promptly upon the borrower’s acceptance of the loss mitigation option.
- The borrower’s acceptance of an Covid-19 Mortgage Assistance offered based on the incomplete package ends any preexisting delinquency on the mortgage loan.
As a result of these changes, homeowners may now get welcomed relief under this change. Just be aware that it doesn’t come without risks. If you were to accept a delay in payment, they may all come due at the same time. Additionally, if you are offered a delay in payment, but later default, you may still face foreclosure. Finally, if you accept the relief, compliance with other sections of Regulation X will no longer apply.
COVID-19-related loan modification options
Similarly, a Mortgage Servicer may offer a loan modification based on an incomplete loss mitigation package if all of the following occurs:
- The term of the loan modification extends the loan by no more than 40 years.
- The payment is not higher than your original payment.
- The loan modification allows you to delay paying covered amounts (a forbearance), you refinance your loan, you sell your property, the mortgage matures (reaches its final due date), or, if insured by the FHA, the lender’s insurance on the loan terminates and those amounts do not accrue interest.
- You are experiencing a COVID-19-related hardship.
- Your previous missed payments must be caught up as a result of the modification. AND
- No fee is charged and all existing late fees or similar charges incurred after March 1, 2020 are waived.
Temporary Special COVID-19 Loss Mitigation Procedural Safeguards
Lastly, In order to prevent abuse, a mortgage servicer must wait to start a foreclosure. This puts the burden on the servicer to make sure that things are met before sending collection letters. These safeguards are:
- Your loan became more than 120 days late on or after March 1, 2020; and
- The statute of limitations for your foreclosure expires on or after January 1, 2022.
There are exceptions to these safeguards. The most dangerous one seems to be a failure to respond. If you are seeking these relief options, working with my firm can dramatically reduce your stress in applying for mortgage assistance.
Do you want to learn more? I am ready to help you. It’s easy to set up a consultation with me through my office. I offer 3 easy ways to connect with me: (1) contact my office via phone at (813) 252-0239, (2) you can e-mail me, or you can schedule a time to speak with me online.
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