What if my loan isn't owned by Freddie Mac or Fannie Mae?
Contact your lender, explain the reason for your financial setback – perhaps you lost your job because of the coronavirus outbreak — and try to negotiate a forbearance plan. While not obligated to follow the lead of Fannie and Freddie, many lenders may be willing to negotiate during this difficult time.
Are big banks offering mortgage relief?
Yes, on a case-by-case basis. Bank of America, for one, says that mortgage borrowers can request to defer payments, with payments added to the end of the loan. Wells Fargo is suspending residential property foreclosure sales and evictions. Wells Fargo is telling its mortgage customers, “If you’re unable to make your payment due to COVID-19 related hardships, we’re offering a 90-day payment suspension.” And Chase bank asks worried mortgage holders to call to work out a plan. If you need help, be proactive and give your bank a call.
Will making mortgage payments late affect my credit rating?
Under the Freddie Mac and Fannie Mae plans, loan servicers will not report late payments resulting from forbearance to credit bureaus. They will also waive all late fees and penalties. Again, if you don't have a loan with Fannie or Freddie, you'll have to negotiate directly with your loan services. In any case, if you're struggling, be sure to contact your loan servicer sooner rather than later, and be sure to document your coronavirus hardship, such as proof of job loss.
What if I'm a renter?
There's some good news for renters, too. If you live in an apartment and your landlord gets mortgage relief because of the coronavirus outbreak, you can't be evicted for 90 days if you can't pay rent due to your own coronavirus hardship. Freddie Mac and Fannie Mae, in coordination with the Federal Housing Finance Agency, have announced a nationwide relief plan for borrowers who own multifamily properties, as well as their tenants. Under the program, landlords whose Freddie and Fannie loans are in good standing can defer their loan payments for 90 days by showing hardship as a consequence of COVID-19. In turn, Freddie and Fannie are requiring landlords not to evict tenants facing hardship based solely on nonpayment of rent during the forbearance period. Freddie Mac estimates that the program can provide relief for up to 4.2 million U.S. renters at more than 27,000 properties.
That still leaves 40 million renters without protection, primarily those who rent from smaller landlords. Some cities, such as Los Angeles, Boston and New York, are putting halts on evictions. But if you’re not covered by a state or municipal ban on evictions, talk to your landlord as soon as possible to discuss your options.
Rates are low. Should I refinance my mortgage?
The average 30-year fixed mortgage rate was 2.79 percent the week ended January 21, according to Freddie Mac. The rule of thumb is that you should consider refinancing only if the new mortgage rate would be 1 percentage point lower than your current rate.
But there are plenty of variables, such as fees and points. (A point is an upfront fee equal to 1 percent of the loan; the more points you agree to pay, the lower your rate.) Will you stay in your home long enough for the lower rate to offset the cost of fees and points? You can crunch the numbers using mortgage calculators such as those offered by Bankrate, NerdWallet, HSH, SmartAsset and others.
Refinancing demand is high, and it may take longer than usual to get appraisals and title searches as government offices shut down because of the coronavirus epidemic. You may also have to do a virtual closing via videoconference, to maintain social distancing safety guidelines. Ask your bank how long their refinancing process takes, and whether they are reasonably sure that they can close the deal in a reasonable amount of time.
(Editor's note: This article was updated with additional information.)