I can't pay my mortgage. What can I do about it? Here's Step 1 of 4

It's the middle of the coronavirus quarantine... you are not sure what day it is because, after all, every new day looks the same as the day before. Suddenly, you look at the calendar and realize that your mortgage bill is about to be late. You then check your bank account and discover that there is not enough money to pay the mortgage, and no money coming into the account in the near future.

As we approach the darkest days of the coronavirus crisis, this scenario is replaying in millions of households across America. For many Americans, it's not just about staying healthy... it's also about fighting to keep a job and feed a family.

So what can you do if you have to choose between feeding your family and paying your mortgage?

If you are caught in the difficult spot of not being able to pay your mortgage, you should know that the government and the banking industry have come up with plans to help those who have suffered economic hardship due to Covid-19.

Those plans involve giving homeowners temporary forbearances. In other words, you may be able to defer your mortgage payment for a few months to help you alleviate your economic burdens during the crisis.

How do you apply? What does the process entail? I have summarized the process into four major steps, and share them with you. Here's Step 1.

STEP 1 - Find out if Fannie Mae or Freddie Mac own your mortgage.

Both Fannie and Freddie have an online self-help tool to find out if they own your mortgage. Fannie Mae's tool is here. Freddie Mac's is here.

This is important because mortgage loans owned by Fannie Mae, Freddie Mac and the federal government offer the widest protections for homeowners.

The same principle goes for FHA, VA and USDA loans, because those loans are either backed, guaranteed or insured by the federal government agencies..

If your loan belongs to Fannie or Freddie, or if you have an FHA, VA or USDA loan, AND your economic hardship is related to the coronavirus crisis, you may qualify for the following:

• Payment relief through a forbearance plan offering a reduction or suspension of mortgage payments for up to 12 months, offered in increments of up to six months

• Late fee relief during the forbearance plan period, and

• Repayment options following the forbearance, including a repayment plan to catch up gradually or a permanent loan modification that aims to maintain or reduce your monthly payment

No Fannie, Freddie, FHA, VA or USDA for me. What can I do?

If your loan is not owned by Fannie, Freddie or the government, there are no specific guidelines as of today that would force your bank to give you a forbearance within the parameters of Step 1. However, most banks will have options for you in the short run, including one, two and three month forbearances.

If your loan is not with Fannie, Freddie or the government, you must be very careful because your bank won't be motivated to give you long term relief. Rather than considering a permanent loan modification, your bank may give you a short term forbearance, at the end of which you will have to pay the full balance owed. So if you received a three-month break, you would have to pay the full three-month amount (plus your regular payment) by the time the fourth month arrives. This is not the preferred scenario for anyone facing a I know that for many families, This would certainly lead to many foreclosures being filed by the time summer comes around.

In my next post, I will go over Step 2.

Call me at (407) 443-3833 or visit my page at www.MiltonTheRealtor.com for more information.

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