Where to start if you can’t pay your mortgage:
The U.S. battle against the coronavirus has some Americans struggling to pay their bills, which includes home loan repayments. As state and local governments continue to order business closures, lockdowns and curfews, out-of-work homeowners are wondering how they’ll afford housing costs.
Some workers are more vulnerable than others, including the roughly 15 million Americans who work in hospitality and leisure, a sector that has been virtually shut down as the coronavirus continues to spread.
Across the country, moratoriums are in place to stop evictions in an effort to lessen the financial burden created by COVID-19. On Monday, the governor of California, Gavin Newsom, authorized local governments to stop any foreclosures through Sunday, March 31, for both homeowners and renters.
“People shouldn’t lose or be forced out of their home because of the spread of COVID-19,” said Newsom, in a statement. “Over the next few weeks, everyone will have to make sacrifices – but a place to live shouldn’t be one of them. I strongly encourage cities and counties to take up this authority to protect Californians.”
Throughout this nerve-racking time, take into account mortgage loan servicers prefer to work with current consumers (even though they can’t currently make monthly payments) than begin collection or property foreclosure procedures. Here are steps you should take if you can’t afford your home loan payments.
1. Talk to your lender or mortgage servicer
It’s important to get in touch with your lender immediately if you expect to be late or unable to make your monthly mortgage payment. The worst thing you can do, says Bill Halldin, a spokesperson for Bank of America, is to not communicate with your lender.
2. Be prepared to repay what you owe
It’s important to note that mortgage forbearance is not mortgage forgiveness, meaning you still have to pay back what you owe.
“Be aware, however, that you will need to repay the amount that was reduced or suspended, either as a lump sum or by adding to your normal monthly payment,” says Leslie Tayne, founder and attorney at Tayne Law Group.
A mortgage forbearance is an agreement between you and your mortgage servicer that lets you either stop making payments or lower your payments to an affordable level on a temporary basis during your hardship. This can be helpful during times like these when your job isn’t terminated, just suspended indefinitely.
For people who will lose wages during the time they’re not working, it’s important to communicate that information to your lender. You should also make a plan for how you will repay the suspended amount when your forbearance ends. Making a budget now could save you stress later, so when the time comes to repay you’ll be ready.
3. File for unemployment
Workers whose jobs were halted because of COVID-19 are likely to be eligible for unemployment benefits. Many states have measures in place to help people who are not being compensated while their job is suspended. Check your state’s employment department to see what options are available to you.
Finally, be sure to verify the legitimacy of anyone you talk to before sharing personal information or identification. During times of crisis, scammers run rampant and prey on people looking for assistance.