Precious Hunter is suddenly worried about paying her mortgage this month.
The reason: coronavirus.
The West Haven, Connecticut, resident has two children who were forced to stay home after the pandemic closed their school. That’s caused an abrupt rise in her monthly expenses for food and the internet, she says.
“These unexpected expenses have been dumped on us,” says the 48-year-old, who works as a senior documentation quality specialist at Yale New Haven Health.
Hunter reached out to Wells Fargo on Twitter, asking for help with her monthly mortgage payment of $1,350. A representative reached out and said they escalated her case this week. Hunter is still waiting to hear back, she says.
“It’s scary. I’m trying to do the best that I can. I’m just looking for a breather, even for a month, where I can use that to provide needed necessities for my family,” she says.
Mortgage applications slow:A ‘traffic jam’ hits home refinancing as owners rush to take advantage of record-low rates
When will the collapse end? Dow, S&P 500 keep falling. So how will we know when the stock market drop is over?
As the number of coronavirus cases in the U.S. rises, more Americans could see their expenses rise, their jobs disappear, or their income fall as businesses are forced to cut hours or close. Many people are struggling to keep up with bills, including their monthly mortgage payment, while they wait to return to work.
Experts have advice: Contact your mortgage servicer as soon as possible if you’re worried about falling behind on payments.
“The most important thing a homeowner can do after missing a mortgage payment is pick up the phone,” says Austin Kilgore, director of digital lending at Javelin, a research-based advisory firm. “The servicers can’t do anything for you unless you’re communicating with them.”
For many Americans, housing costs are their largest expense. In the U.S, 62% of homeowners have a mortgage, according to LendingTree. The median mortgage payment across the U.S. is about $1,100, or less than 15% of a homeowner’s median monthly income.
President Trump said Wednesday that the Department of Housing and Urban Development will suspend “all foreclosures and evictions” through the end of April. The government’s action is aimed at preventing a new wave of foreclosures. All single-family borrowers with a FHA-insured mortgage are eligible.
If you’re not facing foreclosure, but are still financially strained, there are other options to give yourself relief if you have an FHA-insured mortgage. Mortgage forbearance, for example, typically means temporarily suspending or reducing mortgage payments.
A broad mortgage forbearance could allow homeowners to redirect the funds normally reserved for their mortgage payment toward other necessities until they can return to work.
How forbearance works
The terms of and process for applying for a mortgage forbearance vary by lender. When borrowers need to do this, they can reach out to their lender to discuss possible terms. The process can be time-consuming and complex, requiring supporting documents and processing by the lender.
“Call up your lender if you have a particular hardship,” says Tendayi Kapfidze, chief economist for LendingTree. “There are generally a set of requirements set by Fannie Mae and Freddie Mac for mortgage forbearances if it’s a government-guaranteed mortgage. Depending on the event, like a job loss, you may have to show documentation upfront.”
The vast majority of mortgage borrowers have loans that fall under Fannie Mae, Freddie Mac and the U.S. Housing and Urban Development guidelines. So most homeowners will have the same access to forbearances and other assistance, regardless of what company services the loan, Kilgore says.
The U.S. Housing and Urban Development didn’t immediately respond to requests for comment.
Though interest would continue to accrue during the forbearance, it could ease a borrower’s cash crunch, Kapfidze says.
Also, any borrower can resume making payments when they’re able, just as they can prepay their mortgage at any point.
Payments put off while a mortgage is in forbearance need to be made once the period ends. Some lenders expect a lump-sum payment, while others offer repayment plans.
Mortgage forbearance isn’t recommended for those who habitually struggle to make their mortgage payments. Instead, it’s best for those people undergoing temporary hardship.
“Lenders often have a forbearance option that will allow you to skip a payment, but you have to be mindful that the interest often continues to accrue,” says Greg McBride, chief financial analyst at Bankrate.com. “If you anticipate having difficulties, reach out to them proactively and see what options they have. There might be a better solution.”
Lenders’ COVID-19 plans
Here’s a rundown of how various mortgage lenders are taking action:
JPMorgan Chase: Representatives from the bank said help is available for Chase mortgage customers who have been affected by the virus. The company advised that borrowers reach out as soon as possible to discuss forbearance options. Customers can seek help by visiting its website for additional help, the bank said.
Wells Fargo: The bank said it is providing assistance, including fee waivers, payment deferrals and other expanded assistance for credit card, auto, mortgage, small business and personal lending customers. If you need assistance, customers can call 1-800-219-9739 to speak with a specialist to discuss options available for their consumer lending.
The bank has a number of existing options available to help mortgage customers address short- or longer-term financial changes that may impact their ability to keep up with their monthly mortgage payments. They said they need to talk with customers directly to understand their circumstances and identify the best way to help them.
Bank of America: Borrowers can request deferring their mortgage payments, with payments added to the end of the loan. The bank has also paused foreclosure sales, evictions and repossessions. Clients facing financial hardships related to the virus are encouraged to visit the company’s Client Resources website and contact the client services team for assistance.
Fifth Third Bank: The lender is offering the following programs for our consumer and business customers facing financial hardship related to the virus. They have a mortgage and home equity program where they are offering a 90-day payment forbearance with no late fees. To participate in the programs, customers will need to contact Fifth Third.
Ally Financial: Existing mortgage customers will be allowed to defer payment for up to 120 days. No late fees will be charged; interest will accrue. Contact Ally Home Loans Customer Care at 1-866-401-4742.
TD Bank: The bank is working with personal and small business banking customers on a case-by-case basis to provide solutions due to any pay issues, childcare disruptions or those facing illness from the virus. The support includes up to a six-month payment deferral for mortgages.
OceanFirst: This regional bank, which serves customers in New Jersey and the metro areas around Philadelphia and New York City, will defer some loan payments for a variety of businesses and individuals. Restaurants that have to shut down in the wake of the coronavirus outbreak can defer their payments, both principal and interest, for 90 days. They could also seek additional financing of up to $200,000.
Borrowers who are emergency responders or who work in the health care field can ask that payments on their mortgages or other consumer loans be deferred for 90 days. The deferral would apply to both principal and interest. Other customers affected by the virus may also be able to benefit from the relief program, the bank says.
Contributing: Charisse Jones of USA TODAY