The global onset of the COVID-19 has disrupted economies throughout the world. In the United States, and the Northwest in particular, state governments have closed schools, libraries, cultural institutions, and recreational facilities. They have also ordered companies and private businesses that they deem non-essential to cease operations, at least in terms of brick and mortar facilities. Needless to say, this ongoing suspension of commercial activity is pushing the economy into recession and pushing millions of Americans onto unemployment rolls. Yet the bills keep coming. What can a newly laid off worker do to pay the monthly mortgage?
With mortgage forbearance, you may be able to get temporary help to assist in the case of job loss, illness, or a disability. If you are financially impacted by the current COVID-19 pandemic, you may be able to get help from your state government or even the federal government.
Mortgage Forbearance by State
Common to all states that are trying to assist homeowners during the pandemic is this one piece of counsel: those that have the money should pay their mortgages. Each state, nevertheless, makes a point of reaching out to struggling mortgagees.
The Evergreen State’s Department of Financial Institutions offers a toll-free information line — 1-877-RING-DFI (746-4334) — that helps borrowers with the nuts and bolts of seeking forbearance. With all the relevant information, these homeowners are encouraged to contact their loan servicers and arrange for partial or delayed payments.
The Oregon Department of Housing and Community Services offers a number of programs for homeowners in trouble. These include the Oregon Foreclosure Avoidance Program and the Oregon Homeownership Stabilization Initiative. Such resources aid owners with lender relationships, including forbearance appeals to prevent foreclosure and preserve good credit.
The Idaho Housing and Finance Association provides a centralized online portal to seek forbearance assistance for owners of affordable housing. Meanwhile, all borrowers are advised to promptly contact their lenders if they can not meet their monthly mortgage obligations in full.
Colorado officials urge all distressed property owners to petition their lenders for forbearance since federally-backed mortgages are promised this under the CARES Act. The state government also works with lenders to extend a 90-day forbearance period for consumer loans, such as those for college students and automobile purchasers.
Help from the Federal Government
On March 27, 2020, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This represents a package of over two-trillion dollars of economic relief to individuals, families, and small businesses. Much of these funds are direct cash infusions. Individual adults whose 2018 income was below $99,000 can each receive $1,200 from the U.S. Treasury and have been receiving money since April 13th. Joint filers can get $2,400 plus an additional $500 per dependent minor, on the condition that they made less than $198,000 according to their most recent tax return.
Another helpful provision of CARES is its Paycheck Protection Program. Covering small businesses and qualified non-profit organizations. The Small Business Administration (SBA) defines such enterprises as employing no more than 250 people. In some industries, SBA raises that maximum to 1,500. Most often, SBA bases its evaluation on the number of workers compared to average annual receipts. In any event, the PPP affords business owners the funds to cover payroll costs, including benefits, for eight weeks. Monies are disbursed to small businesses as loans but these will be forgiven if employees are retained after businesses re-open. Information portals are available at Treasury and SBA websites.
Help from State Governments
To accommodate the surge of unemployment applications resulting from temporary layoffs due to COVID-19, the Washington Employment Security Department has expanded its physical facilities, workforce and technological capacity. Meanwhile, the governor solicited the cooperation of the public utilities to suspend disconnections and waive late fees for customers unable to make timely payments.
The state Department of Financial Institutions (DFI) maintains an updated web page for borrowers falling behind due to COVID-19 disruptions. This information includes guidance on requesting a forbearance from the lender. While this action does not curtail what is owed, it delays collection expectations for a fixed period of time. The DFI also issues guidelines to mortgage servicers with reference to the coronavirus realities.
These voluntary measures embrace:
- Willingness to grant forbearance
- A 90-day moratorium on reporting late and delinquent payments to the credit agencies
- Offering borrowers three months to modify their loans for easier payment
- Postponing foreclosures
Mortgage originations presently continue in Washington. Those who closed loans since the coronavirus response was implemented should find out whether such adjustments would be available to them.
The economic ramifications of COVID-19 are not lost on the state of Oregon. According to statistics from the state’s Employment Department, initial unemployment claims jumped from 4,900 the week of March 8th to 76,500 the following week. 97,200 new claims followed for the week of March 22nd. The department added personnel with each deluge, last numbering 450 processors for claims. As of March 18th, the department instituted a policy of more flexible eligibility criteria: these cover those who need to stay home with children since schools are closed. Also, people who were exposed to COVID-19 carriers can collect while they remain under quarantine. The Employment Department website is the best place to start investigating.
Oregon’s Division of Financial Regulation is reaching out to mortgage lenders and other issuers or financial credit. These communications are urging financial institutions to err on the side of compassion when considering forbearance petitions or other requests for relief. The government also urges banks and finance companies to accept partial payments during the course of the pandemic. The fact that mortgage servicers are operating with limited staffs is actually slowing punitive collection activities, a silver lining for besieged borrowers if not for lender employees. Not one of these government recommendations constitutes a legal mandate.
The Idaho Department of Labor has tweaked its rules relative to claimants whose situations are coronavirus-related. The requirements for ongoing job searches are suspended as long as the applicants can demonstrate that returning to their jobs is anticipated by both employer and employee. In addition, the department will review, on a case-by-case basis, the eligibility of those who are unable to work due to COVID-19 and those who are unwilling to
go to work for fear of COVID-19 exposure. Also, supplemental funds from the CARES Act will be added to general unemployment compensation.
The Idaho Housing and Finance Association proposes the following for mortgagors and mortgagees:
- Forbearance in the interest of short-term alleviation of financial stress. Borrowers are encouraged to seek, and lenders encouraged to grant, forbearance petitions of up to six months when at all possible.
- Deferring several months of payments until the end of the loan term, in effect creating a balloon payment. Unlike typical forbearance, the mortgagor makes the regular payment upon resumption of loan amortization rather than making larger remittances to catch up. Again, the CARES Act precludes these delays from being reflected on the borrower’s credit report or history.
The Colorado Department of Labor and Employment is the first stop for laid off workers to get financial assistance. People who were terminated or had regular hours reduced can apply for benefits online with the departmental SmartFile webpage. Self-employed Coloradans who have been forced to stop doing business because of the pandemic may have access to state unemployment funds through the CARES Act distribution to the states. As of this posting, however, CARES monies are not yet available for this purpose.
As house payments loom, the Colorado Housing and Finance Authority (CHFA) is advising moratoriums on foreclosures and evictions. Concerning the loans in which CHFA invests, it offers a hardship assistance support plan in consultation with its loan servicing team. Its website offers all the pertinent links. Other mortgage customers can access the Disaster Response Network at FannieMae online, FreddieMac, or the federal agency that guarantees their loan.
Keeping Your Distance
Each of the agencies and programs noted above is doing business almost entirely online or, in some instances, by telephone. Due to the extremely contagious nature of COVID-19, in-person transactions are ill-advised. Keeping in close touch with creditors, while uncomfortable for many, is essential to managing this period of stifled revenue.
Sammamish Mortgage has been around since 1992 and is here for you. Based in the Pacific Northwest, Sammamish Mortgage offers high-quality loan programs in Oregon, Washington, Idaho, and Colorado.
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