Under the recently enacted CARES Act, homeowners, rental property owners, and renters may be eligible for mortgage relief options. To be protected against foreclosures, the mortgage must be federally owned or otherwise backed by one of the federal agencies. To understand who owns or backs your mortgage, you can call your servicer. The servicer has an obligation to provide you, to the best of its knowledge, the name, address, and telephone number of who owns your loan. Reports indicate that nearly half of the nation’s mortgages are owned or backed by Fannie Mae or Freddie Mac.
Mortgage Relief Options for Homeowners
- Your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
- If a homeowner experiences a financial hardship due to the coronavirus pandemic, the homeowner has a right to request a forbearance for up to 180 days. An extension can also be requested for up to another 180 days. The homeowner must contact the loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account.
If granted a forbearance to delay making monthly payments during this temporary period:
- the homeowner will not incur late fees;
- the homeowner will not have delinquencies reported to credit reporting companies; and
- all foreclosure and other legal proceedings will be suspended.
Mortgage Relief Options for Property Owners
Rental property owners with federally backed mortgages also have access to mortgage forbearance. Certain multifamily (5 or more units) rental property owners with federally backed loans will have access to forbearance for a period of 30 days, and that period can be extended for up to 2 additional 30-day periods upon request, with the option to discontinue the forbearance at any point.
Relief Options for Tenants
Tenants are also protected by this temporary moratorium on evictions and late fees if they live in a “covered dwelling,” which can generally be defined as a rental home that is receiving federal subsidies or a property with a federally backed mortgage. During the 120-day period beginning on March 18, 2020, the landlord of a “covered dwelling” may not:
- make, or cause to be made, any filing with a court to initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges;
- charge fees, penalties, or other charges to the tenant related to such nonpayment of rent;
- may not require the tenant to vacate the covered dwelling unit before the date that is 30 days after the date on which the lessor provides the tenant with a notice to vacate; and
- may not issue a notice to vacate until after the expiration of the 120 day period.
Rhoades McKee is continually monitoring legal developments related to COVID-19 and will keep you updated. In the meantime, should you have any questions about the pandemic’s impact on your real estate property or any real estate law issues, please do not hesitate to contact Patrick Drueke or a member of the Real Estate Legal Team at Rhoades McKee.More Publications