If you are falling behind on your mortgage payments because you are dealing with Covid-19, there are a few ways you can help prevent or stop a foreclosure on your home. One of the best things you can do when you realize you have Covid-19 and will not be able to make normal payments is you can talk with your lender. Without an open line of communication with your lender, it can be hard to help prevent foreclosure after multiple missed payments. There are still some ways to get government assistance if you or your family has been affected by Covid. We will cover these options, so keep reading to find out what you can do to help prevent foreclosure in the midst of the Covid-19 pandemic.
At the start of the pandemic, our country effectively shut down, leaving millions without sources of income. Because of this, many families found themselves worrying about whether or not they could keep up their mortgage payments on top of their general costs of living. Luckily, the government put some protection in place, but you may be wondering if that protection extends to your mortgage? This article will help you figure out what to do if you are facing a foreclosure in the midst of the pandemic.
Do I still have to make mortgage payments if I have Covid-19?
Currently, the answer is yes — you are not relieved of making your mortgage payments just because you have Covid-19. There is no rule, ban, or legislation that says you can stop making payments on your debts due to having Covid. At the beginning of the pandemic, the government instituted an eviction ban, meaning that tenants who weren’t making rent payments could not be kicked out. This, however, ended in September of 2021, meaning that missing payments can still lead to foreclosure and eviction.
How Do I Stop a Foreclosure If I Have Covid-19?
As the pandemic gets more and more under control, leniency will also become stricter. Because of this, it is important to communicate with your lender as soon as you realize you may be missing payments because you get Covid-19. While federal exemptions and bans may be ending, your lender may have some things in place that help people struggling to keep up with their mortgage payments. But they won’t be able to help if you don’t let them know that you need help. You have the best chance of working something out with your lender if you let them know you need help before you even miss a payment. So, what can you do if you’re facing foreclosure while sick? Start by talking to your lender. There are a few options they can offer that can either keep you from having to deal with foreclosure or can stall the foreclosure process if you have already defaulted on a few payments. Let’s take a closer look at what those options are.
If you have been diagnosed with Covid-19, and you know this means you won’t be able to work, which means you won’t be able to make your mortgage payment, it is a good idea to reach out to your lender immediately to see if they would be willing to grant you a forbearance while you are sick. A forbearance is when your lender either pauses your payments or lessens your monthly payments for a certain period of time. The terms of forbearance are decided on by what the lender is willing to accept. Typically a forbearance lasts between 3-6 months, though some borrowers are allowed up to 6 months of extensions.
It’s important to remember that, even while you are in forbearance, you are still responsible for your payments. If your lender lessened the monthly payment for a set amount of time, missing these payments will still lead to foreclosure. Similarly, if your payments are lessened, once that time period ends, you must begin making payments once again. Again, most Covid-19 protections ended in September 2021, so now you have to look for options that are normally available to help stall or stop your foreclosure.
Will Getting Forbearance Hurt My Credit Score?
It depends. If you get your forbearance before you miss a payment, then it won’t necessarily affect your credit score. However, if you missed a few payments prior to getting the forbearance, then the delinquent payments will show on your credit report, harming your score. If you are behind on payments, but you catch up in the midst of your forbearance, it’s likely your credit report will show that you are up to date on your payments. Regardless of when you began your forbearance or how you caught up to your payments, your credit report will still show that you did receive a forbearance, which has the potential to affect a future lender’s decision. However, this is preferable over seriously delinquent payments or foreclosure.
Can I Get Help With Mortgage Payments If I Have Covid-19?
This answer depends on your state more than anything. For instance, Texas has a program called the Texas Emergency Mortgage Assistance Program. This program helps individuals make their mortgage payments if they have been economically impacted by Covid-19 — either by getting sick, having their job shut down, or being let go because of the pandemic. Check out what your state or county offers to see if there is a program that helps take care of mortgage payments for individuals affected financially by the pandemic.
There are also many banks that are assisting their borrowers during the pandemic. Be sure to call and ask if your lender is providing any sort of Covid-19 payment relief. Some banks are allowing deferments of payments for a period of time, offering flexible payment plans, or having a range of hardship programs that can help you make it through the pandemic without having to face foreclosure. Again, this is not something that you can take advantage of unless you reach out to your lender and let them know that you need some help.
My Covid-19 Forbearance is Ending, But I Still Can’t Make Payments — What Should I Do?
Another protection the federal government has enacted is what’s known as the Covid-19 Recovery Modification. This policy allows certain mortgage holders to readjust their mortgage payments by lowering the principal and interest payments each month. If you are at the end of your forbearance period, and your lender has denied an extension, but you still can’t make your payments, then consider applying for the Covid-19 Recovery Modification.
There are other options you can consider when you are struggling to meet your mortgage payments. These are options that are normally available to you, even when there isn’t a pandemic. These options include:
- Loan Modification
- Short Sale
- Deed in Lieu
While these options are available, there are not currently any special considerations made for individuals affected by Covid-19.
If you have been affected by the Covid-19 pandemic — either with illness, or having your job shut down — the best thing you can do is communicate with your lender! They will know the protections you have because of the pandemic and will be able to help you figure out the best way to move forward while still keeping your home. It is more profitable to lenders if you continue making payments, even if the payments are lessened or delayed. This means that they will want to work with you to make sure you continue paying off your mortgage. Use this to help you in your time of need!