Any Mortgage Relief During COVID-19?

My last article discussed the effects of the stock market plunge on mortgage note investing. Now, as the COVID-19 pandemic worsens, many have lost their income. This is a whole different ballgame! While not everyone invests in the stock market, most people have a mortgage or rent to pay. When a borrower doesn’t have income coming in, that makes it near impossible to keep their obligations intact.

An NPR article mentioned, homeowners who have lost income or their jobs because of the coronavirus outbreak are getting some relief. Depending on their situation, they should be eligible to have their mortgage payments reduced or suspended for a period.

Federal regulators, through Fannie Mae and Freddie Mac, are ordering lenders to offer homeowners flexibility. This move covers about half of all home loans in the U.S. — those guaranteed by Fannie and Freddie, the article says.

Homeowners can’t just stop paying their mortgage though! Borrowers must apply for mortgage relief through their mortgage servicer. The servicer will then decide whether the borrower qualifies for the assistance and how they would repay the missed payments. The federal plans don’t cover over 40 million renters either…

The U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency (FHA), the regulator for Fannie Mae and Freddie Mac, have also directed mortgage servicers to halt all new foreclosure actions and suspend those already in progress.

As mortgage note investors, working with borrowers to modify their loans is something that may of us do anyway. Since most privately held mortgage notes are not backed by Fannie and Freddie, it will be up to us to continue to assist borrowers in hardship. For performing notes, this is easily accomplished by deferring payments to the back end of the loan.

For those notes that were already non-performing, it means a longer delay in the ability to foreclose because of the stay put in place by many states and counties. Be sure to stay abreast and in communication with your services on the rapid and increasing changes taking place, before proceeding with any attempt to collect on your notes.

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