NY Mortgages & COVID19- What you need to know.
At this point, many of you have probably heard Governor Cuomo state that he has enacted a 90-day mortgage relief program, whereby NY homeowners can skip making mortgage payments for up to 90 days, without penalty. THIS IS SIMPLY UNTRUE!
NY "Mortgage Payment Suspension" ProgramIn truth, NY Governor Andrew Cuomo, through the NYS Department of Financial Services, asked/requested (i.e., not mandated) the mortgage companies and servicers to voluntarily forbear (i.e., not forgive; whatever payments are missed, must be repaid back in full after the grace period or a loan modification agreement must be signed to recapitalize the missed payments back into the loan [note: there is no promise or guarantee your loan servicer will modify the terms of your loan after any forbearance period]) up to 90 days of mortgage payments missed by a mortgagor who can show that they were adversely impacted by COVID-19. Here is a link to the letter that was sent out to the mortgage companies and servicers (https://www.dfs.ny.gov/industry_guidance/industry_letters/il20200319_coronavirus_mortgage_relief).
Simply put, the State has no power to rewrite mortgage contracts or suspend mortgage payments. Thus, if you cannot afford your mortgage, you must contact your loan servicer directly to find out what options they may have to assist you.
Federal "Mortgage Payment Suspension" ProgramsWith respect to the announcement from the federal government sponsored entities Fannie Mae and Freddie Mac--i.e., concerning up to 12 months of mortgage payment relief for homeowners--the devil is yet again in the details.
First, you must find out if your loan is ultimately owned by Fannie Mae or Freddie Mac. You can do this by visiting the following websites and entering your information into the loan look-up tools (https://www.knowyouroptions.com/loanlookup) and (https://ww3.freddiemac.com/loanlookup/). If your loan is owned by either Fannie Mae or Freddie Mac, you then must contact the company that services your loan (i.e., the company you get monthly statements from), and ask them to QUALIFY you for a COVID-19 forbearance--i.e., you are not automatically qualified by being from NY or by missing mortgage payments. If you are qualified for any COVID-19 forbearance, although you will not accrue late fees or negative reporting to your credit bureaus during the forbearance period, the skipped payments ARE NOT FORGIVEN! Thus, at the end of the forbearance period, you owe every single mortgage payment missed and, if you do not pay, the lender may commence foreclosure proceedings.
Finally, if your mortgage is insured by the federal government (e.g., FHA or VA), whereby you pay something called Mortgage Insurance Premium ("MIP") every month, the Department of Housing and Urban Development ("HUD") has not come right out and said they will, for sure, allow COVID-19 impacted borrowers to forbear mortgage payments. Instead, the HUD website just directs borrowers to contact their loan servicers to discuss what programs, if any, are available for assistance.
DO NOT SIMPLY CEASE MAKING MORTGAGE PAYMENTS!In sum, DO NOT JUST STOP PAYING YOUR MORTGAGE BECAUSE THE NEWS OR YOUR GOVERNOR SAID YOU COULD. Instead, if your health and/or finances have been directly and adversely impacted by COVID-19 and you are unsure if you can afford to pay your mortgage this month (or for the next several months), you must FIRST contact your loan servicer and explain your situation. Your loan servicer will then tell you what options, if any, they have to offer. REMEMBER, a forbearance agreement (i.e., permission to "skip" some payments or pay a reduced amount for a few months) is NOT a loan modification. Any payments or amounts of money that you skip or pay less to your mortgage loan servicer under a forbearance agreement are not forgiven and must be paid back to your lender immediately after the expiration of the forbearance period. Moreover, no servicer can GUARANTEE that your loan will be modified after a forbearance period. The loan modification process normally takes several months and negatively impacts your credit rating.