Homeowners who have lost income or their jobs because of the coronavirus outbreak are getting some relief. Depending on their situation, they should be eligible to have their mortgage payments reduced or suspended for up to 12 months.
Federal regulators, through the mortgage giants Fannie Mae and Freddie Mac, are ordering lenders to offer homeowners flexibility. The move covers about half of all home loans in the U.S. — those guaranteed by Fannie and Freddie. But regulators expect that the entire mortgage industry will quickly adopt a similar policy.
Under the plan, people who have suffered a loss of income can qualify to make reduced payments or be granted a complete pause in payments.
“That forbearance is up to 12 months, depending on their particular situation,” says Mark Calabria, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie.
Homeowners can’t just stop paying their mortgage. “They need to contact their servicer — that is the lender that they send the check to every month,” he says. “That lender will work with them to be able to work out a payment plan. Obviously, we hope to get them back on their feet as soon as possible.”
Calabria says people in financial distress because of the coronavirus can just verbally testify to that over the phone with their lender. Documenting the hardship can come later. “You’re not going to have to send 20 pieces of paper at the front of this,” he says. “We want to do it quickly.”