If you are out of work due to COVID-19, or have seen your hours significantly reduced, then you are likely understandably wondering: What if I cannot pay my mortgage payment? Can the bank put my house into foreclosure during this time? At The Law Offices of Paul Y. Lee we are here to help our clients who file for bankruptcy and we know that many people have a lot of questions about what happens when they get behind in their bills.
Keep reading to determine what your options are and what is likely to happen in this difficult. If you need a free case evaluation with a bankruptcy attorney we recommend you contact us at 888-748-0025 at your earliest convenience.
Your Protection Against Foreclosure
HUD has created a 60-day suspension on all evictions and foreclosures related to FHA loans. All loads that are backed by Fannie Mae and Freddie Mack get the same 60-day reprieve, along with promises of additional extensions as become necessary. The vast majority of loans are included in this 60-day reprieve so that likely provides some relief for you.
What to Do if You Cannot Make Mortgage Payments
If your mortgage was current (i.e. you were not behind in payments) when the shut-down began, it was guaranteed by Fannie or Freddie, and you cannot make next month’s payment, then you will need to contact your loan servicer. There are flexible options that can last as long as one full year of suspended payments. There are many other directed flexible options too.
Many believe that it is also likely that federal regulations will be passed that require loan servicers to provide loan modifications or payment extensions overall. If your loan is not with Fannie or Freddie, then there is more up in the air because your loan is not federally insured. At this point, it appears that almost all lenders are willing to be flexible as their borrowers work out how to move forward in this unprecedented time.
California Residents Have a 90-Day Grace Period
Governor Newsom worked with four of the five top federally charted banks that work with home loans (Bank of America is the only one that has so far not come on board). Another 200+ smaller banks and credit unions have joined the agreement to waive all mortgage payments for three months – no matter what a person’s income is. There will be no fees, penalties, or negative effect on a person’s credit score.
If you were already behind on your mortgage, this could give you a few months to get back up to date. However, it may be a good time to talk to a bankruptcy attorney to get moving forward for good. If you are in need of a free consultation, contact The Law Offices of Paul Y. Lee at 888-748-0025 now.