A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts in place two protections for homeowners with federally backed mortgages:
A foreclosure moratorium
A right to forbearance for homeowners who are experiencing a financial hardship due to the COVID-19 emergency
If you don’t have a federally backed mortgage, you still may have relief options through your mortgage servicer or from your state.
If you're facing a short-term financial hardship and need temporary assistance with your mortgage, your lender may offer you a "forbearance." With this option, your lender temporarily reduces or suspends your mortgage payments for up to 12 months while you get back on your feet.
As of March 2020, to help homeowners who have lost income or their jobs because of the coronavirus outbreak, mortgage giants Fannie Mae and Freddie Mac both have ordered lenders to be more flexible with borrowers, reducing or suspending payments for up to 12 months. That action alone covers half of the country’s home loans.
Things to know about forbearance:
- Requires lender approval
- You may be allowed to make your back payments over time
- Normally does not fully reinstate mortgage until plan is completed. If a homeowner misses just one payment, they can end up in the same stage of the foreclosure process they were in previously. This is a major problem with this particular option.
FAQs about Mortgage Forbearance For Dallas, Texas Homeowners
How can I find out who services my loan?
Visit the Making Home Affordable website for links to instantly find out if Freddie Mac or Fannie Mae service your loan. https://www.makinghomeaffordable.gov/get-answers/Pages/get-answers-find-out-mortgage.aspx
What if my loan is not backed by Fannie Mae or Freddie Mac?
If your loan is not backed by Fannie Mae or Freddie Mac, call your mortgage service provider or lender. Their contact information should be on your most recent mortgage statement. Lenders from all sectors, residential and commercial, are currently providing various forms of forbearance.
What is mortgage forbearance?
A mortgage forbearance agreement is an agreement made between a mortgage lender and a borrower in which the lender agrees not to foreclose, and the borrower agrees to a mortgage plan that differs from the original repayment plan. Forms of forbearance range from a temporary halt in mortgage payments (ex. no payments for 90 days) to loan modifications (ex. interest-only loans, lower interest rates, etc). Learn more here
What does mortgage forbearance look like?
The steps for applying for mortgage forbearance vary by lender. Borrowers should contact their lenders for specific information. You need to sign paperwork with your lender before you are allowed to stop paying your mortgage. Fannie Mae, Freddie Mac and most lenders are expediting the process and requiring minimal paperwork.
For more information about how mortgage forbearance terms are changing and how you should continue to check back with your lender, read this article from NPR.
Does mortgage forbearance impact my credit?
Mortgage forbearance usually has little to no impact on your credit.
“Generally, forbearance is not likely to have any impact on the credit score,” says Ethan Dornhelm, a FICO senior director of model development. According to the National Association of REALTORS, lenders may (or may not) report to credit companies the existence of a mortgage forbearance, but it definitely does not wreck your credit like being delinquent on a mortgage.
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The above information regarding the “Guide to coronavirus mortgage relief options for homeowners in Dallas, TX" was provided by Nitin Gupta, CRS, GRI, REALTOR. Nitin has experience helping families buy and sell homes in the Dallas/Fort Worth area including Grapevine Texas. If you’re thinking of selling or buying in Grapevine, he would love to share his knowledge and expertise. Learn more about Grapevine real estate market and Dallas County Real Estate news at
http://www.nitinguptadfw.com/blog
The communities he proudly serves include Dallas, Coppell, Irving, University Park, Dallas, Frisco, Flower Mound, Colleyville, Grapevine, Highland Park.
