Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?
Many large financial institutions are suspending foreclosures because of the massive economic damage caused by COVID-19. Some banks have stopped proceedings indefinitely. Others have set time limits for foreclosure suspensions such as 60 or 90 days. Even as health and financial issues remain uncertain, this is a good time for homeowners to take stock and learn about the revised rules and the actions you take can help save your home.
If you’ve lost your job or are concerned about your ability to meet your mortgage obligation, it would be wise to:
- Review refinancing and payment options — With the interest rate so low due to the coronavirus pandemic, refinancing your home might give you an advantage. By reaching out to your lender, you can explore your options and perhaps discuss a payment schedule that lessens the likelihood of future foreclosure.
- Know your rights under the CARES Act — Relief might be available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 30. This legislation requires mortgage servicers to extend deferred or reduced mortgage payment options for up to six months to borrowers who are unable to meet their obligation due to the COVID-19 national emergency. If by the time the temporary suspension has expired you cannot afford payments, contact your lender for an extension. It is your right under the law.
- Review your budget — Review your finances and determine where you can cut spending to save money for your future mortgage payments. Look for optional expenses such as memberships and cable TV that you can eliminate. There also may be resources in your community that have free or low-cost counselors who can help you with your budget.
A temporary foreclosure suspension is a helpful stopgap, but planning ahead may prevent the foreclosure process from continuing after the coronavirus pandemic is over. If you are facing foreclosure and need assistance on what to do next, an experienced foreclosure defense attorney can help you with your options and guide you as circumstances continue to change in response to this overwhelming medical crisis and its economic fallout.