Americans struggling to pay their mortgages because they’ve lost a job or income during the coronavirus pandemic can put off that bill for up to a year due to the CARES Act. But while the measures should be creating a feeling of relief, many borrowers have been left anxious because of confusing messages from the government and banks.
Experts are concerned about how this will play out for borrowers over the coming months, even after the recently enacted relief package from Congress, called the CARES Act, which allows many people to delay their mortgage payments for up to a year.
“The problem with the CARES Act is that it doesn’t make clear how borrowers pay back the money during a forbearance period,” says Shamus Roller, executive director at National Housing Law Project, a nonprofit legal advocacy center.
“There’s a chance that something could go wrong in that process,” he says, “and it requires a lot of interacting with service centers that are overburdened with calls.”
Other concerns that are out there is that if borrowers continue to miss payment for half a year or longer then the FHFA will have to rescue Fannie, Freddie and lenders alike.
What are your options?
That depends on many factors and how long everything takes to get back to normally. Some areas of the economy will recover quickly, while other like airlines, hospitality, bars & restaurants, move theaters, and many others could take years to recover.
Enhanced unemployment insurance is available to most people out of work including self employed and independent contractors. However this is typically a small portion of what your annualized income is and could be challenging to maintain your head above water.
Bankruptcy could be a viable option to stopping foreclosures, repossession, and debt collectors.
In Summary
Be proactive and don’t just sit around waiting for the government to do something. Take an inventory of your assets, review your obligation, area of work and expertise, and then weigh your options. In some cases bankruptcy could be your best option, to get some immediate relief, which clan play a “stay” on everything all at once and allow time to start to reorganize.