State, federal, and local governments have created a little coronavirus financial relief for renters and homeowners who can’t earn money because of the coronavirus. However, using the mortgage forbearance relief might cost you money later on.
Mortgage Payments: Under the new federal bailout law (CARES Act of 2020), you may apply for mortgage forbearance (in other words, you temporarily may stop paying your mortgage without being considered delinquent) for your single-family home (there are different rules for multi-unit properties) of up to 180 days (6 months) if you have a federally-backed mortgage (about 50-70% of all mortgages, including FHA mortgages and Fannie Mae & Freddie Mac mortgages). California has also ordered some mortgage forbearance, but not all lenders are included in this relief, most notably Bank of America. However, the interest that you would normally pay every month (mortgage payments consist of payments for the principal balance and for the interest on the unpaid portion of it) will still be due, though the lender may not charge interest on that unpaid interest, nor may they charge fees or penalties. The language in the new law does not provide for repayment of this interest, so it is unknown at this time when that interest would have to be paid. Be aware that if you just stop paying your mortgage you will be delinquent; you must apply to your mortgage servicer for this forbearance and state that you have a financial hardship caused by the coronavirus. Once you apply, your servicer must provide the forbearance for up to 180 days and may not request or demand any further documentation. But you will owe the interest for all the months of the forbearance, and at this time no one seems to know when that interest must be paid. I strongly suggest continuing to pay your mortgage if you can afford to do so in order to avoid a problem with the unpaid interest later on.
Rent Payments: What tenants who cannot earn income because of the coronavirus need more than anything is a suspension of rent payment collections until they can return to work. While a few of us have called for this, no governmental unit that I know of has provided a moratorium on rent collection.
Foreclosures: The CARES Act also provides a moratorium on all foreclosure processes, including foreclosure sales and evictions after foreclosures, through May 17. If you are facing foreclosure, this will buy you a couple of months, but nothing more unless the date is extended by future legislation. As of March 25, California has stopped all foreclosures for 60 days. Some counties and cities have provided further relief, check with your city and county to see if they have done so.
Evictions: The CARES Act provides a moratorium on some evictions through July 16. Whether tenants get this protection under this law depends on how the landlord’s mortgage for the property is held. As of March 25, California has also stopped all evictions for 60 days, but this is a shorter period than provided for in the CARES Act. Some counties and cities have provided further relief, check with your city and county to see if they have done so.
This is a very stressful and unpleasant time for everyone because of this pandemic, and the vast majority of people now have the added problem and stress of not being able to pay their rents or mortgages. These protections will help a little, though the best thing the government could do would be to order a complete suspension of rent and mortgage payments until everyone can return to work. Use the information and links provided here to get the help you need during this stressful time.