By Joshua Huff, sports editor
Homeowners directly impacted by the coronavirus are set to get some relief after federal regulators and mortgage companies have agreed that people should have the ability to reduce their payments or even suspend them in certain circumstances.
Behind mortgage stalwarts Fannie Mae and Freddie Mac, lenders are encouraged to offer homeowners flexibility with reductions in mortgage payments and the suspension of payments for up to a year.
The move, according to NPR, will cover about half of all home loans in the country, those guaranteed by Fannie and Freddie. Regulators believe that the rest of the mortgage industry will soon follow.
This follows U.S. Treasury Secretary Steven Mnuchin speaking to Republican senators on Tuesday warning them that the U.S. unemployment rate could reach as high as 20% if an economic stimulus package was not approved.
The mortgage relief plan encompasses homeowners who have lost income as a result of the economic downturn. Those impacted can qualify to make reduced payments or even apply to suspend payments for the foreseeable future. Homeowners, however, cannot just cease paying their mortgage altogether.
“They need to contact their servicer, that is the lender that they send the check to every month,” Director of the Federal Housing Finance Agency Mark Calabria told NPR. “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.”
The easement of the loans is not meant to be complete forgiveness of repayment, but a temporary salve that gives homeowners time to recover and gather themselves.
Fannie Mae and Freddie Mac are directing lenders not to report homeowners to credit bureaus for late or missed payments. The key is not to overburden homeowners already stressed about employment and bills.
Both Wells Fargo and JPMorgan Chase are also working to help borrowers impacted by the virus.
“Don’t just miss payments and ignore the problem,” Chris Mayer, a real estate economist at Columbia University’s business school, told NPR. “You need to reach out to your servicer. Tell them that you’re having problems associated with coronavirus or your job and ask them to be put into a forbearance program.”
A mortgage forbearance is an agreement between you and your mortgage servicer that allows you to either put a pause on monthly payments or even lower your payments to a manageable level for a short spell.