Coronavirus Mortgage Relief: What Homeowners Need to Know

Update: Due to growing financial difficulties brought on by COVID-19, the Treasury Department has distributed over $6 billion to states in an effort to help struggling landlords and renters. States have now received $30 billion in rental assistance, and more is expected to come in the following months.

In 2020, the federal government signed the Coronavirus Aid, Relief and Economic Security Act into law. The CARES Act was the first act passed by the federal government to provide financial relief to businesses and individuals in light of the economic strain caused by the COVID-19 pandemic. One of the components of the CARES Act was coronavirus mortgage relief.

But does the CARES Act mortgage stimulus relief remain in 2021 and beyond? Find out more about what was offered, whether it was extended and what else homeowners or renters might need to know.

Who Is Covered by Federal Coronavirus Mortgage Relief?

The mandates under the CARES Act and subsequent extensions only cover mortgages that are federally backed. Federally backed loans are those that are guaranteed, insured or made by the Department of Veterans Affairs or the Department of Agriculture or meet one of the following other requirements:

If you’re not sure if your mortgage is federally backed, call your mortgage lender to find out. With around 65% of mortgages protected by the 2020 mandates, there’s a good chance yours was one of them.

Are People Without Federally Backed Mortgages Out of Luck?

The coronavirus mortgage stimulus mandated by the CARES Act and other federal efforts doesn’t cover mortgages that aren’t backed by the federal government. But that doesn’t mean your mortgage company won’t offer some relief.

States also offered and continue to offer some support, and many worked with mortgage providers to provide some relief for homeowners. Some mortgage companies had contingencies for working with people who were struggling with mortgage debt even before COVID. You might be able to apply for relief that lets you skip a few months of payments or restructure your mortgage to make it more affordable. Contact your mortgage provider to see what’s available for your situation.

Another option to consider is refinancing your mortgage to get potentially better rates. That can drop the total monthly mortgage payment.

What Mortgage Relief Is Being Offered?

The CARES Act provided two protections to help homeowners who were dealing with financial distress because of COVID-19 and related economic issues. The first was a foreclosure moratorium. That meant lenders of covered loans couldn’t take action on foreclosures or begin new ones for at least 60 days from the time the act was signed in March 2020. 

The moratorium was extended several times, including most recently as a multi-department cooperative effort with the White House. The extension pushed the foreclosure moratorium all the way through June 30, 2021.

The CARES Act also provided a right to forbearance for covered mortgage holders. Forbearance is the option to stop making scheduled payments on a loan without incurring negative consequences. In this case, the payments would likely be added to the end of the loan, so you’d simply pay them later.

You can request a forbearance of 180 days. You can also request a second forbearance of 180 or 90 days if you’re still experiencing COVID-19-related financial distress. The length of forbearance depends in part on your situation and the type of federal loan program you got your mortgage through. That’s up to 12 months of mortgage payment relief for those who qualify.

The FHA specifically extended the time period for starting new forbearance plans through September 30, 2021. That means there’s still time for FHA homeowners to take advantage of these programs.

Another program being offered by the FHA is called the COVID-19 Advance Loan Modification. This program helps homeowners with qualifying FHA loans bring their loans current should they fall behind due to a COVID hardship.

What Relief Did Renters Have Under the CARES Act?

The CARES Act also provided some relief for renters. For 120 days from March 27, 2020, landlords of certain types of properties couldn’t begin eviction procedures or charge fees because someone hadn’t paid their rent. The mandate covered federally financed rental units. That accounted for around 28% of all rental properties in the nation at the time.

As with the homeowner relief stimulus programs, the eviction moratoriums were extended multiple times. Most recently, the Biden administration extended the eviction moratoriums through July 31, 2021.

What Does the End of Moratoriums Mean for Homeowners and Renters?

You’ll note that many of the moratoriums are coming to an end, and it’s important not to sit passively as they do. If you’re still struggling financially, ignoring the problem could come with some serious consequences once the moratoriums end. You could be facing eviction or foreclosure at some point.

Instead, take action today. Start by reaching out to your landlord or lender to find out if they can help. Demonstrate your willingness to pay and explain your situation. Mortgage lenders often have programs that offer some relief, and if you have decent credit, you could refinance your loan to save money. 

But you have to do that before you wreck your credit with late mortgage payments or a foreclosure. Once you reach that point, you may be out of assistance options other than bankruptcy.

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