On August 27,2020 the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend the moratoriums on single family foreclosures and real estate owned evictions until at least December 31,2020. This moratorium only applies to Enterprise backed (Fannie Mae & Freddie Mac) single family mortgages only. See the NACTT Academy, The Cares Act and Mortgage Forbearance, September 3, 2020.
Under the Cares Act, you may request forbearance on a federally backed mortgage loan, regardless of delinquency status by submitting a request to the servicer and affirming that you are experiencing a financial hardship during the COVID-19 emergency. Cares Act section 4022(b)
A forbearance is when the mortgage company allows you to temporarily reduce your mortgage payment or suspend or pause making your mortgage payments for a period.
A borrower can get a forbearance for up to 180 days and then request an additional 180 days for a forbearance. This would give a borrower up to one year.
Even though this legislation is necessary to help people who are struggling with financial hardship due to COVID-19, I want to emphasize that this is not a forgiveness. Eventually, you will have to pay back the forbearance arrears.
Some people may be able to get modifications to put the forbearance arrears at the end of the mortgage while others may be able to pay the arrears when they sell them a home or you can work out a specific payment plan to pay the arrears.
However, there is never any guarantee that you can get a loan modification or a deferral plan that you pay the arrears when you sell your home. Also, nobody knows when the mortgage companies will commence foreclosure if people cannot satisfactorily pay back the forbearance arrears pursuant to the terms that the mortgage company sets.
At TAIEBLAW, we always encourage people to pay their mortgage payments first if they can.
If you must choose between paying the mortgage or credit cards, always pay your mortgage first.
A much easier way to cure the mortgage arrears is to get a five year plan under chapter 13, which will not only take care of the forbearance arrears but may also wipe out your personal loans, credit card debt and other unsecured debt. If you are back to work and/ or have a regular income again, you should not let the mortgage arrears accumulate since they are only deferred; they are not going away. If you just assume that you are getting a loan modification or will have an easy payment plan with your mortgage company, you may be in for a rude awakening. If you keep on delaying, then you may really risk losing your home, where you may not be able to catch up without a loan modification which is never guaranteed.
This virus is a horrible plague and we have all been impacted financially. However, the forbearance are only temporary and it is better to deal with it now than by keep on delaying when you are in a crisis scenario.
The whole purpose of the bankruptcy code is to help honest debtors, who through unforeseen circumstances, have gotten into a horrible financial situation and they need a fresh start. What can be more of an unforeseen circumstance than this horrible plague that has hit the entire world.
Since the courts are now open in New Jersey and creditors are now pursuing their state law remedies to get paid on credit cards and other unsecured debts and mortgage companies are moving foreclosures to judgments, you do not want to delay.
Even though sheriff sales are still not being scheduled it is better to use the bankruptcy process to help you now before foreclosures get out of control.
Things are hard enough now and you don’t want creditors to pursue you as you get back to work.
If your debt is stressing you out and overwhelming you, we can help you get a fresh start by filing a bankruptcy for you. For more information go to TaiebLaw.com or call us at 856-600-0819.
AGAIN, PLEASE NOTE WE ARE OPEN FOR BUSINESS TO HELP ANYBODY WHO IS IN FINANCIAL DISTRESS.
Steven N. Taieb, Esquire has been a South Jersey bankruptcy attorney for 35 years and is board certified in consumer bankruptcy law by the American Board of Certification which is accredited by the American Bar Association.
We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy Code.