Getting coronavirus mortgage relief is confusing. Here’s how to make it easier

Since the coronavirus pandemic shut down much of the United States economy, homeowners have flooded their mortgage companies with pleas for help.

According to the Mortgage Bankers Assn., there are now 3.5 million mortgages in so-called forbearance programs, which allow borrowers to delay payments or make partial payments for a time while their financial situation improves.

The programs have brought temporary relief, but the process has been confusing. Here’s what you need to know.

What can I do if I can’t pay my mortgage?

Under the federal CARES Act, a borrower with a federally backed mortgage is entitled to cease paying their mortgage for six months as part of forbearance programs, as long as the homeowner has faced financial hardship from the current pandemic.

The relief, however, is not automatic.

If you want to take advantage, you must request it from your mortgage servicer — the company to whom you make your payment each month.

Though you must have a financial hardship tied to the current pandemic, there isn’t a threshold as to the level of hardship you must face. And you don’t have to submit documentation proving your hardship.

After six months, if you want, you can request an additional six-month break from paying, bringing your total forbearance period to a year.

According to the federal Consumer Financial Protection Bureau, there should be no additional fees, penalties or additional interest charged to you because of your forbearance.

The guaranteed right to forbearance doesn’t apply to people with private mortgages, but mortgage servicers are also providing help for those individuals. If you have a private mortgage, you should check with your mortgage company to see what help is available.

How do I know if I have a government-backed mortgage?

Most mortgages in the United States are backed by the federal government, either through Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Veteran Affairs or the U.S. Department of Agriculture.

But it can be hard to know if you actually have one of those loans. Typically, you don’t write out a check to a government agency each month; you pay a private mortgage servicing company, which collects your payments and passes them along to the investors that own your mortgage.

According to the CFPB, your mortgage servicer must, to the best of their knowledge, tell you who backs your loan. The consumer bureau said the information might also be on your mortgage documents, particularly if you have an FHA or VA loan.

In the case of USDA loans, you may actually pay that government agency. You can see if you have a Fannie Mae loan through its website, and Freddie Mac also has a loan-lookup tool.

Do I need to pay back the payments I miss during forbearance?

Yes, the payments are postponed, not forgiven. You will not be required, however, to pay back the missed payments in a lump sum if you have a government-backed loan.

Even private lenders are offering different options, knowing that if you’ve lost your job or seen your income reduced, paying everything back at once would be very difficult.

There’s been a lot of confusion over lump-sum payments, with some consumer advocates saying mortgage companies have incorrectly told consumers they are required to make them, or have made vague statements that have led consumers to believe that’s the case.

You can pay everything back at once if you want. But government agencies say they are trying to clear up the confusion and have issued guidance to mortgage servicers on what sort of repayment plans they must offer if a borrower can’t pay a lump sum.

You are still allowed to make partial payments during your forbearance period if you wish. Making partial payments reduces the amount you will have to pay back in the future.

So how do I pay back whatever payments I miss?

Options will vary somewhat depending on what type of government-backed loan you have, hence part of the confusion. But government agencies insist you don’t need to pay a lump sum, and servicers must work from a list of options to find an affordable repayment plan and approve it if the borrower qualifies.

The options include paying a higher mortgage payment each month until all your missed payments are accounted for.

There also are options that keep your monthly payments the same as before the forbearance. If you have an FHA loan, for example, servicers must evaluate you for a “COVID-19 national emergency partial claim,” which keeps your monthly payment the same and puts missed payments into a separate new interest-free loan that must be paid off at the time when your first mortgage is paid off — say, when the loan ends, when you refinance or when you sell your home.

For Fannie Mae and Freddie Mac borrowers, one option is the “cap and extend modification,” which keeps your mortgage payments the same as before the forbearance and extends the terms of your loan.

There are also options to lower monthly payments if original payments are unaffordable. There’s a limit to how low payments can go, however, so you could still face foreclosure if you don’t regain employment.

Additional information on repayment options is available on the CFPB’s website under the title “How do I repay my forbearance?” Some of the options aren’t available if you were delinquent before the pandemic.

OK, I want to start the forbearance process. What should I do?

You can call your servicer to request the forbearance, but wait times might be long. You may also be able to apply online, so check you servicer’s website.

The CFPB recommends asking your servicer for written documentation to confirm the terms of the forbearance agreement.

If I am having trouble applying or face issues during forbearance where can I go for help?

If you feel your servicer isn’t following the rules or is being especially difficult, you can file a complaint with the federal consumer finance agency.

You can also receive free or low-cost help from HUD-approved housing counselors.

The CFPB also has more information on what to watch out for.