About the CARES Act

In March, Congress passed the Coronavirus Aid, Relief & Economic Security (CARES) Act, which included three important provisions to protect homeowners who are financially impacted due to the Coronavirus pandemic.

  1. No foreclosures for 60 days: Borrowers cannot be foreclosed on for 60 days starting March 18th. The only foreclosures that are permitted during this period are on vacant and abandoned properties. 

  2. Right to Request Forbearance: Borrowers with a FEDERALLY BACKED LOAN who have suffered a financial hardship because of the COVID pandemic can request a temporary pause on their mortgage payments for up to 180 days. If they are still experiencing the hardship at the end of that period, they may request an additional period of up to 180 days. 

  3. Credit Reporting: Borrowers who were current on their loan payments before experiencing a COVID related hardship will not be reported delinquent if they take forbearance or other mortgage payment assistance so long as the borrower sticks to whatever plan they work out with their servicer. However, if a borrower does not reach out to their servicer and then fails to make their mortgage payment, they can be reported delinquent.

What You Need to Know

  • The CARES Act forbearance provision only applies to borrowers with a FEDERALLY BACKED LOAN. However, you may still be eligible for forbearance even if you don’t have one of these loans. You don’t need to know what kind of loan you have – your servicer will have that information and can let you know what kinds of assistance is available. Learn more with the CARES Act Forbearance Fact Sheet for Borrowers with FHA, VA, or USDA Loans. 

  • You must reach out to your servicer and request forbearance. IT IS NOT AUTOMATIC. If you do not reach out to your servicer and you don’t make you monthly payment, you may be reported as delinquent to the credit bureaus.

  • Because you will have to repay the payments you skipped during forbearance, you should only take forbearance for the period of time that you cannot afford to make your mortgage payment. It is always a good idea to start with a shorter period of time and then extend it if you need it. Your servicer may suggest that you start with a short period, such as 90 days, and then extend as needed. Don’t worry – you will not “lose” any forbearance time. You will still be eligible to extend your forbearance period for a total of 12 months of total forbearance. Just be sure to check in with your servicer BEFORE the end of your forbearance period to let them know if you will need more time.

  • DO NOT TAKE FORBEARANCE IF YOU DO NOT NEED IT. If you are not experiencing a financial hardship and can continue to make your mortgage payments you should continue to do so. Forbearance should not be used as “insurance”. You do NOT need to sign up for forbearance now just to make sure you have it in case you need it later. If you request and receive forbearance assistance, even if you continue to make your regular monthly payment and don’t use it, it may impact your ability to refinance or purchase a home in the near future.

Mortgage assistance will be available to you if you need it.

Glossary of Terms

A LOAN MODIFICATION
A Loan Modification is when changes are made to your loan to try to reduce your monthly payment and take care of past due amounts. Typically, this is done through lowering the interest rate or extending the loan term.   

A LUMP SUM
A Lump Sum payment is when you pay the entire past due amount in a single payment.  

A REPAYMENT PLAN
A Repayment Plan takes your past due amount and spreads it out over a period of time. Your regular monthly payment would be higher for a while because it would also include a portion of your past due amount. The length of a repayment plan will depend on the type of loan you have. Typically, they run between 6 and 12 months.  

DEFERMENT
DEFERMENT is sometimes used as another word for forbearance. However, sometimes it is used to describe a program where the amount of past due payments is due in a lump sum when the loan is paid off.  

FEDERALLY BACKED MORTGAGE
A Federally Backed Mortgage is a loan that is federally owned or backed by one of these federal agencies or entities:
  • Fannie Mae
  • Freddie Mac
  • U.S. Department of Housing and Urban Development (USDA loans)
  • Federal Housing Administration (FHA loans)
  • U.S. Department of Veteran Affairs (VA loans)