The spread of COVID-19 across the globe revealed how a global health crisis can affect the global economy. Stock markets have plummeted and economists are suggesting that we are headed into a major recession as a consequence of the pandemic.
The number of vulnerable families has spiked as households lose their incomes due to the outbreak and we are only seeing the beginning of the devastating economic impacts of the crisis. With that, many struggle to pay their bills including monthly mortgages and people are becoming extremely worried about the situation.
According to LendingTree, 62% of homeowners have a mortgage and to the majority, housing costs are their largest expense. Fortunately, U.S. President Donald Trump announced last Wednesday a moratorium on evictions and foreclosures for people with mortgages sponsored by Fannie Mae and Freddie Mac or by the Federal Housing Administration on single-family homes. The moratorium will last at least 60 days but the specific relief a homeowner can acquire will depend on their situation.
Federal regulators announced Friday that homeowners with mortgages backed by Freddie or Fannie could qualify for deferral or payment reduction if they have lost income or employment due to the Coronavirus outbreak.
The private sector is also responding and extending help, offering relief to those affected. In particular, The Bank of America announced Thursday afternoon that they are extending additional support to consumers and small business owners by giving them the option to defer mortgage payments. The support option will be run on a case-by-case basis and can be extended on a month-to-month term. Other financial institutions are also in dialogue with borrowers who have been affected by the economic fallout to provide relief options
As it stands, the situation is dire for most homeowners and terms for relief haven’t been released to the public. If you are at risk of missing mortgage payments, follow these steps to safeguard yourself if the government policies change or when your income is drained.
PICK UP THE PHONE
If you are worried about falling behind on payments, pick up the phone and talk to your mortgage servicer immediately. Your mortgage servicer won’t be able to assist you unless you communicate with them. Start by looking for the name and contact details of your mortgage servicer; they can be found on your mortgage statements.
When speaking to your mortgage servicer, tell them how the pandemic has affected your livelihood and ask what relief options they can provide. If your mortgage is backed by Fannie and Freddie, mention that you might qualify for deferral or payment reduction.
There might be other possible relief options that you might qualify for such as forbearance, repayment through installments, loan modification, lower associated payments on your mortgage, and principal reduction. The state and the Federal Government have created programs to help homeowners that are struggling, you just have to communicate with your servicer to know what you are eligible for.
RECORD ALL COMMUNICATION AND CORRESPONDENCE BETWEEN YOU AND YOUR SERVICER
Your servicer also provides service to several hundred or thousands of people affected by the Coronavirus. When you work out a plan with them, they might likely lose documentation of what they promised due to the increase in the volume of people they are dealing with.
You must keep your record of all the communication that you and your servicer have engaged in. One method you can do is keep mortgage-related emails in a secure folder in your account or if you receive paperwork through the mail, place them in a file folder. You can also record calls using your smartphone and back up all text messages from your servicer.
Using those aforementioned methods, you can ensure that you can provide various documented evidence of important details discussed when confusion or conflict arises.
DOCUMENT YOUR FINANCIAL DIFFICULTIES
The current economical, medical, and political situation due to the pandemic is extremely unstable and is subject to change anytime depending on circumstance. As things develop, the narrative about the relief options on mortgages provided by the Federal government and Mortgage associations could change.
With that, experts advise documenting all the reasons for your need for assistance. A written document from your employer stating that you are laid off from work due to the virus can one example. It can be a recent medical bill that can be but not necessarily related to the pandemic. Other evidence that you should document to prove financial hardship include payslips, income tax returns, proof of expenses like food, utilities, transportation, and medication.
With all the uncertainties looming, including the lack of specified terms for relief, it’s important to provide evidence of the catalyst of your financial difficulties or whatever is preventing you from paying your mortgage on time.
As the situation continues to unfold, follow these three steps and they will help you achieve the best possible outcome you want to gain to lessen your financial burden in these times of struggle.