2 Things to Know About COVID-19 and Foreclosures and Homeownership
Authored By: Montana Legal Services Association (MLSA)
This article answers common questions about Montana homeowners' rights and the Coronavirus. If your property has more than 4 units, this article does not apply to you. Please know that situation is changing quickly, and so too could your rights. This article was last updated March 19, 2021. For more information on this topic, visit the National Housing Law Project’s Homeowner Protection and Resources page.
1. Relief from foreclosure is available for some borrowers with mortgages.
On March 27, 2020, the President signed into law the CARES Act, which includes limits on foreclosure for certain loans on single-family properties. The CARES Act does not apply to all mortgages on single-family properties, only those with federal backing. The protections are from March 18, 2020 through June 30, 2021. The CARES Act prevents mortgage services from:
- Initiating a foreclosure
- Seeking a court order for a foreclosure judgment or order of sale
- Holding a foreclosure sale or executing a foreclosure-related eviction.
This Act protects a borrower with a single-family (1-4 unit) property who has a federally backed mortgage loan.
A "federally backed mortgage loan" is a loan owned, insured or guaranteed by one of the following entities: the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs, the Department of Agriculture, Fannie Mae or Freddie Mac.
If your property has more than 4 units, this article does not apply to you.
2. A Montana homeowner with a federally backed mortgage loan may also ask for a forbearance to suspend their monthly mortgage payments.
Montana homeowners with a federally backed mortgage loan experiencing financial hardship due directly or indirectly to the COVID-19 pandemic may request forbearance on their federally backed mortgage loan, regardless of delinquency status.
To read more specific information about your particular type of federally backed mortgage, see:
- FHA’s Foreclosure and Eviction Moratorium Extended Through June 30, 2021. The Federal Housing Administration (FHA) published Mortgagee Letter (ML 2021-05). This ML announces the extension of the foreclosure and eviction moratorium through June 30, 2021. This guidance is applicable to all FHA Title II single family forward mortgage and Home Equity Conversion Mortgage (reverse) programs, except for those secured by vacant and/or abandoned properties.
- RD’s Foreclosure and Eviction Moratorium Extended Through June 30, 2021. The Foreclosure and Eviction Moratorium announced by USDA, Single Family Housing Guaranteed Loan Program (SFHGLP) on March 19, 2020 is extended until June 30, 2021. The moratorium does not apply in cases where the servicer has documented the property is vacant or abandoned.
- VA’s Foreclosure and Eviction Moratorium Extended Through June 30, 2021. Department of Veterans Affairs (VA) guaranteed loans are subject to a moratorium Circular 26-21-05 on foreclosure through June 30, 2021. The moratorium applies to the initiation of foreclosures, and to the completion of foreclosures in process.
Frequently Asked Questions
How can I tell if my mortgage is federally backed?
To find out if your mortage is federally backed and eligible for these protections, you can use the loan look up tools for Fannie Mae and Freddie Mac:
Your mortgage may be backed by the Federal Housing Administration (FHA). Some loans that were orginally FHA insured may have been sold out of that status. To find out if your mortgage is backed by the FHA you can:
- Check your mortgage documents for an FHA case number or reference to FHA
- Check your mortgage statement for FHA mortgage insurance premium charge
- Check your property records if they are available online for a second deed of trust in favor of the HUD Secretary
- Call HUD's National Servicing Center at 877-6222-8525.
Your mortgage may be backed by the Veteran's Administration (VA). To find out, check for specific references to the VA in your mortgage documents or if your closing document show you paid fees to the VA.
Your mortgage may be backed by the Department of Agriculture Rural Housing Service (RHS). You can check your closing documents to see if your loan is guaranteed by RHS or you can contact your loan servicer.
What if I can't pay my mortgage because of COVID-19?
If you have a federally backed mortgage, your mortgage servicer (the company you make payments to) may be required to offer you a forbearance plan. Forbearance means that your mortgage payments will be reduced or suspended for a certain time period.
If you request assistance because you are experiencing a financial hardship caused, directly or indirectly, by the COVID-19 emergency, the servicer must offer you forbearance of up to 180 days, meaning that your monthly payments can be reduced or deferred for up to six months. At the end of that 180 day period, you can request an additional period of forbearance, up to another 180 days.
Are the payments suspended under a forbearance plan forgiven for good?
No. Once the forbearance period ends, you will still have to work with the mortgage servicer to bring the loan current through one of a number of methods, including reinstatement by lump sum, repayment plan or loan modification.
Get Legal Help
- If your home is located in Montana, learn how to apply for free legal help for low-income Montanans.
- If your home is outside of Montana, you'll want to look for legal help in that state.