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Homeowners facing lost income from COVID-19 may get mortgage relief
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At the start of the year, mortgage delinquencies were at the lowest level in more than 40 years. That could change fast, as more people lose income due to the COVID-19 outbreak.
“Servicers are already hearing from a number of people who are worried about their ability to make payments going forward,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.
Mortgage servicers are the companies that collect those payments. The good news: If your mortgage is backed by Fannie Mae, Freddie Mac or the Federal Housing Administration (FHA), you may be able to suspend or lower your payments for up to 12 months, if you’ve lost income due to the pandemic. Other lenders may offer similar relief.
“It’s not a forgiveness of the debt,” said Fratantoni. “But during this time when the crisis is occurring, you don’t need to worry about making that mortgage payment if you’re really under duress.”
The problem is, mortgage servicers still have to pay the investors who fund those mortgages. The industry is asking the Federal Reserve and Treasury Department for help covering those payments.
In a global pandemic, helping people stay in their homes is essential, said Nikitra Bailey of the Center for Responsible Lending.
“If we are being asked to remain in place, then it’s important for people to actually have a home where they can do that,” she said.
There’s help for renters, too. Fannie and Freddie are offering mortgage forbearance to apartment building owners if they agree not to evict tenants who face hardship because of the crisis.
More renters are at risk than homeowners, said Carol Galante with UC Berkeley’s Terner Center for Housing Innovation. That’s partly because they’re more likely to be working lower-wage service jobs affected by the shutdown.
But property owners with mortgages backed by Fannie Mae and Freddie Mac tend to be large landlords with dozens or hundreds of units, Galante said. “The vast majority of Americans rent in smaller buildings, mom and pop landlords, single-family homes, and many of those folks may have more difficulty with their landlords,” she said. “Or their landlords will have more difficulty with their lenders.”
Many renters, she said, will likely need direct cash assistance to help them stay in their homes.
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