Help for Homeowners Who Are Having Trouble Paying Their Mortgage
Both federal and state law now permit homeowners to enter into forbearance agreements with their mortgage servicer if they are facing a COVID-19-related hardship, such as loss of a job. A mortgage servicer is the company that your lender (or the entity that later purchased your loan from your original lender) hires to conduct the day-to-day work of processing mortgage payments, issuing monthly statements, interacting with homeowners, and if necessary, reviewing homeowners for modifications and forbearances.
If you enter into a forbearance agreement, you will not have to make mortgage payments during the period covered by the agreement. However, this does not mean that your payments during this period are forgiven, they will be deferred. A forbearance will not be reported negatively on your credit report and you will not be charged late fees during the forbearance period. If you are facing a COVID-19-related hardship, you should reach out to your mortgage servicer as soon as possible to request a forbearance of your monthly mortgage payments - this process is not automatic. Get more information about identifying your mortgage services and their contact information.
If you have a federally-backed mortgage (how do I know if I have a federally-back mortgage?) and have a COVID-19 related hardship, your servicer is required to enter into a forbearance agreement with you that allows you to defer making your monthly mortgage payments.
- For homeowners with a Fannie Mae or Freddie Mac mortgage, you can defer making payments for up to fifteen (15) months;
For homeowners with an FHA mortgage, VA mortgage or USDA mortgage, you can defer making payments for up to twelve (12) months. However, if you first entered into a COVID-19-related forbearance on or before June 30, 2020, you can defer making payments for up to eighteen (18) months. Many servicers will grant forbearances in increments, usually three months at a time. You must contact your servicer by phone or through its website and explain that you have a COVID-19-related hardship. No documentation is required, your verbal affirmation is sufficient. If your hardship continues after your forbearance period ends, you must request a new forbearance agreement from your servicer, however, again, you are limited to the maximum amount of missed mortgage payments listed above.
Federally-backed mortgages include the following:
- Loans that Fannie Mae or Freddie Mac purchased from your original lender.
- Loans insured by the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA). USDA loans are also known as Rural Development (RD) or Rural Housing Service (RHS) mortgages.
- Reverse mortgages insured by the U.S. Department of Housing and Urban Development (HUD), which are called Home Equity Conversion Mortgages or HECMs.
To find out if you have a federally-backed mortgage, call your mortgage servicer or check your mortgage statement, which sometimes lists the loan type. For Fannie Mae and Freddie Mac you can also check online or call.
Fannie Mae or call 1-800-2FANNIE (8am to 8pm EST)
Freddie Mac or call 1-800-FREDDIE (8am to 8pm EST)
Under N.Y. Banking Law § 9-x, which went into effect on June 17, 2020, regulated banking organizations and mortgage servicers supervised by New York's Department of Financial Services ("DFS") must provide up to one year (365 days) of forbearance relief to homeowners who experience a financial hardship as a result of COVID-19. Banking Law § 9-x generally provides forbearance relief for New York homeowners undergoing a COVID-19-related hardship, except for those homeowners with a federally-backed loan (who are entitled to comparable relief under the CARES Act). If you are not sure whether Banking Law § 9-x covers your loan, you should contact your servicer to ask.
You must contact your mortgage servicer - by phone or through its website - to request a forbearance. Your servicer may ask you to submit documentation of your hardship to approve your forbearance request. Servicers are also prohibited from reporting late payments to credit agencies, must waive late fees and online payment fees for the duration of the and must allow mortgagors an additional 90-day grace period to complete trial loan modifications.
The obligation to grant a one-year forbearance pursuant to Banking Law § 9-x is subject to the regulated institution having sufficient capital and liquidity to meet its obligations and operate in a safe and sound matter. Banking Law 9-x permits a regulated institution to deny a request for a forbearance if it determines that such relief would threaten the company's financial solvency. However, the institution must provide notice to DFS with information regarding its financial condition. To date, the OAG is not aware of any servicers who have claimed that they are unable to offer the relief required under Banking Law § 9-x. However, the OAG wants to hear from any homeowners who have been denied a forbearance agreement or post-forbearance relief due to this provision in the law. If you are denied forbearance relief by a servicer who claims it will threaten the company's financial soundness, please submit a complaint to the New York State Attorney General's Office.
How do I ask for a forbearance?
Visit your mortgage servicer's website or call your mortgage servicer if you think you will have trouble paying your mortgage and inform them that you cannot make your payment because of a financial hardship related to COVID-19. If you call, make sure to request forbearance.
Look at the last monthly statement you received. The company listed on that statement is your current mortgage servicer. There should also be a customer service number that you can call. However, we strongly encourage you to check your mortgage servicer's website first. Many mortgage servicers have a special section on COVID-19-related relief on their website, and many are encouraging their customers to reach out electronically because of large call volumes and potential wait times. You may even be able to request a forbearance through their website.
What happens after the forbearance period ends? Must I immediately repay the missed payments?
Missed payments become due when the forbearance period expires, and you will need to agree with your mortgage servicer in advance on the terms of repayment. However, there are a variety of rules and programs that require your servicer to work with you to help you get back on track. The specific rules vary depending on who owns, insures, and/or services your loan.
Your servicer may ask if you can pay back the missed payments as a lump sum at the end of your forbearance plan or spread out the missed payments over a number of months. However, many borrowers affected by the current financial crisis will not be able to repay their missed payments all at once. If you cannot afford those options, you are entitled to ask for further assistance, such as a payment deferral, term extension or loan modification, so that you do not default on your loan or risk losing your home to foreclosure.
Depending on who owns, insures, and/or services your loan, your servicer may be able to offer you certain types of loan modifications that are designed to help homeowners who cannot repay all missed payments at once. For example, Fannie Mae, Freddie Mac, and FHA all provide programs that help homeowners get back on track without paying all the missed payments at once. And now, under Banking Law § 9-x, then New Yorkers without a federally-backed loan should be entitled to comparable post-forbearance options. You can find more information about these programs below.
**Post-forbearance options for Fannie Mae and Freddie Mac loans
- Your servicer is required to offer you one of the two COVID-19-related modifications at the end of the forbearance period if you are unable to pay the missed payments as one lump sum and you were current on your mortgage (or no more than 30 days behind) when the emergency was declared on March 13, 2020. You are not required to submit a complete loss mitigation application for these COVID-19-related modifications.
- Payment Deferral: If you are able to resume your regular monthly payments once your forbearance period is over, but cannot pay back all of your missed payments, your servicer should offer you a modification that will take your missed payments and add them as a non-interest bearing balloon payment due at the end of your mortgage. To be eligible for this modification, you must have been current or no more than 31 days delinquent as of March 1, 2020.
- Flex Modification: If your hardship is permanent and you are not able to resume your monthly payments at their prior amount, your servicer must review you for a Flex Modification which seeks to lower your monthly mortgage payments. You may receive this modification even if you were more than 31 days behind on your mortgage as of March 1, 2020. However, you may have to provide some documentation of your reduced income.
If you have a Fannie Mae or Freddie Mac mortgage and believe that you have been unlawfully denied a COVID-19-related modification, please file a complaint with the Attorney General's Office.
**Post-forbearance options for FHA loans
- If you were current on your mortgage when the COVID-19 emergency was declared on March 13, 2020 (or no more than 30 days behind), are able to resume making your previous monthly mortgage payment but are unable to pay back the missed payments from your forbearance plan as one lump sum when the forbearance is over, your mortgage servicer must offer you a COVID-19 Recovery Standalone Partial Claim which places the missed payments at the end of the mortgage, due as a lump sum.
- If you are unable to resume paying your regular monthly mortgage payments at the end of a forbearance, HUD will immediately review you for a COVID-19 Recovery Modification which seeks to lower your monthly mortgage payment by 25%. This modification does not require an application or the submission of documents.
- If you are unable to resume paying your regular monthly mortgage payments and the COVID-19 Recovery Modification does not provide enough relief, then you may apply for an FHA-HAMP modification. An FHA-HAMP modification seeks to modify your mortgage to create an affordable monthly payment that is no more than 31% of you gross monthly income. There is no requirement that you were current on your mortgage at the time the COVID-19 emergency was declared. You can request the help of a free housing counselor in putting together an application by calling call the Home Ownership Protection Program at 1-855-HOME-456 (1-855-466-3456).
If you have an FHA mortgage and believe that you were unlawfully denied a COVID-19 National Emergency Standalone Partial Claim, please file a complaint with the Attorney General's Office.
**Post-forbearance options for VA loans
- Mortgage servicers are prohibited from requiring homeowners to pay the missed payments from the forbearance period as one lump sum.
- If you are able to resume making your pre-COVID-19 monthly mortgage payments at the end of the forbearance, mortgage servicers may place the missed payments at the end of the mortgage as a non-interest-bearing balloon payment.
- If you are not able to resume making their pre-COVID-19 monthly mortgage payments at the end of the forbearance, or the servicer decided not to offer you the option of making a balloon payment at the end of the loan, the mortgage servicer must review you for all of the VA's loss mitigation options, including repayment plans, traditional loan modifications, and disaster-related loan modifications.
- For repayment plans and traditional loan modifications, there is no requirement that you were current on your mortgage when the COVID-19 emergency was declared. However, for the disaster-related loan modifications, you had to have been current (or no more than 30 days behind) on your mortgage when the COVID-19 emergency was declared on March 13, 2020.
- Visit the VA for more information about its forbearance and post-forbearance options.
**Post-forbearance options for RD or RHS loans (USDA loans)
- If you are able to resume making your pre-COVID-19 monthly mortgage payments, the mortgage servicer may consider you for either a repayment plan or may extend the loan term for a period that is at least the length of the forbearance.
- If you are not able to resume making your pre-COVID-19 monthly mortgage payments, the mortgage servicer must consider you for all the USDA loss mitigation options, including its traditional loan modification products.
- For the USDA's traditional loan modification productions, there is no requirement that you were current on your mortgage at the time the COVID-19 emergency was declared.
- Visit the USDA for more information about its forbearance and post forbearance options.
**Post-forbearance options for non-federally-backed loans
- Banking Law § 9-x gives covered homeowners the right to request an affordable repayment plan at the end of their forbearance.
- Resumption of Monthly Payments: If you are able to resume your regular monthly payments once your forbearance period is over, but cannot pay back all of your missed payments, you can ask for one of two products: (i) extend your loan for the length of the forbearance; or (ii) spread out the forborne payments on a monthly basis over the remaining term of the loan (this may increase your monthly payment);
- Reduced Payments: If you are unable to resume your regular monthly payments, you may negotiate a loan modification that meets your changed circumstances.
- If you and your and loan servicer cannot agree on an acceptable loan modification, then Banking Law § 9-x requires servicers to defer arrears accumulated during the forbearance as a non-interest-bearing balloon due when the loan comes due or is satisfied (through a sale or refinance).
The Attorney General wants to make sure that mortgage servicers are helping borrowers to resume payments after a hardship related to the COVID-19 crisis. If you are having trouble getting clear information from your servicer, are not getting appropriate assistance with a repayment plan or loan modification, or are being told that you must pay the missed forbearance payments as one lump sum, please let the Attorney General know by filing a complaint.
New York has also taken steps to pause the foreclosure process in our state courts in order to protect homeowners from losing their home to foreclosure during the COVID-19 crisis. Below are answers to some frequently asked questions about this pause on foreclosure proceedings.
I fell behind on my mortgage because of COVID-19 will I be sued in court?
No, as long as you mail or email to your mortgage servicer a "Hardship Declaration." Under the new COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 ("NYS Foreclosure Prevention Act"), if a homeowner submits a Hardship Declaration, the mortgage company cannot bring a foreclosure action before January 15, 2022. This applies to all mortgages except for those issued, insured, purchased or securitized by New York State (usually known as a SONYMA mortgage).
You can download the Foreclosure Hardship Declaration here: https://www.nycourts.gov/eefpa/".
You should call your mortgage servicer to find out the mailing address or email address where you should send the Hardship Declaration.
Can I be served with a pre-foreclosure notice?
You may receive a pre-foreclosure notice stating the mortgage servicer intends to sue you in foreclosure. Under the NYS Foreclosure Prevention Act, the pre-foreclosure notice must now also include the Hardship Declaration and the mailing and email address to send it to. Again, once you send the Hardship Declaration in to the servicer, the servicer is not allowed to sue you in foreclosure before January 15, 2022. You should keep a copy or picture of the signed form for your records.
If you do receive this pre-foreclosure notice and would like to know your options, you can call the Homeowner Protection Program (HOPP) at 1-855-HOME-456 (1-855-466-3456) for free advice.
I was already sued in foreclosure before the COVID-19 emergency was declared. What happened to my case?
If you are currently experiencing a COVID-related hardship, your foreclosure case cannot move forward as long as you submit a Hardship Declaration to the court. Under the NYS Foreclosure Prevention Act, even if you were sued in foreclosure before COVID-19, if you now have a hardship as a result of COVID-19 and you submit a Hardship Declaration, the mortgage servicer cannot move the case forward until January 15, 2022
The Office of Court Administration is in the process of mailing a Hardship Declaration to every homeowner sued in foreclosure. However, you can download the Foreclosure Hardship Declaration here: https://www.nycourts.gov/eefpa/.
If you would like free advice regarding the status of your case, please call the Homeowner Protection Program (HOPP) at 1-855-HOME-456 (1-855-466-3456).
I was issued a court date to appear previously and it is coming up. Should I go to court?
If you are represented by an attorney, you should call your attorney.
If you are not represented by an attorney, you should call the court and ask what you should do in light of the new law, the NYS Foreclosure Prevention Act. You can find the number for the Court by looking up the phone number for the Supreme Court in the county where your home is located.
Homeowners should always be wary of unsolicited calls where the caller claims to be able to save their home or where they ask for any personal information. Offers to save your home for a fee are fraudulent. Neither the banks, nor HUD-approved housing counseling agencies will charge a fee for assistance.
To protect yourself from being scammed:
- Be skeptical of online ads or telephone solicitations that promise they can get you a mortgage modification or save your home from foreclosure. Only your bank or loan servicer can approve a loan modification.
- Do not give your personal financial information to a solicitor, such as your bank account number, social security number, or the name of your loan servicer. Your bank will already have this information.
- Never pay an up-front fee for mortgage-related services. It is a violation of New York law to charge upfront fees for such services, and violations should be reported to the Attorney General's office at 1-800-771-7755.
If you believe you have been scammed by a foreclosure rescue operator or a debt relief organization, submit a complaint to the New York State Attorney General's Office.
- National Consumer Law Center's Mortgage Relief for Homeowners Impacted by COVID-19, which includes tips for homeowners and advice on whether you should request a forbearance).
- Center for New York City Neighborhoods (CNYCN) COVID-19 Outbreak: Homeowner Resources, which includes information on how New Yorkers anywhere in New York State can get free, local assistance with their homeownership issues.
- Consumer Financial Protection Bureau's (CFPB) Guide to Coronavirus Mortgage Relief Options.
- New York State Department of Financial Services (DFS) has posted a Frequently Asked Questions with information for homeowners about seeking forbearance relief and avoiding scams.
- Fannie Mae's COVID-19 Relief Options, which describes help available to Fannie Mae homeowners and provides link to find free HUD-approved housing counseling.
- Freddie Mac's Extending Help to Homeowners Impacted by COVID-19, which describes help available to Freddie Mac homeowners and provides link to Borrower Help Centers.
- "FHA's If You Need Assistance in Making Your Mortgage Payments, Help is Available" which describes help available to FHA homeowners and provides a link to finding a free, HUD-approved housing counselor.
- VA's Guidance for VA Home Loan Borrowers During COVID-19, which includes answers to frequently asked questions and how to find free assistance.
- USDA's Rural Development COVID-19 Response, which includes separate links for RD loans and for RHS loans.
- Consumer Financial Protection Bureau's (CFPB) Don't Fall for a Foreclosure Relief Scam or Bogus Legal Help, which provides additional advice on how to identify homeowner-related scams.