My COVID Mortgage Forbearance is Ending – Now What?

If you live in New York, and your deadline for mortgage forbearance is rapidly approaching, there are options you should be aware of.

What Are Your Options if Your Forbearance is Ending?

If you are more financially sound than you were at the beginning of your forbearance, you have a few options:

  • Repayment plans – if you can afford to pay a bit more each month, your bank can add a portion of what you owe to your regular monthly mortgage payment.
  • Deferral or partial claim – if you can only pay your regular mortgage payment each month, the bank can add what you owe to the end of your loan.
  • Mortgage modification – if you can no longer afford your regular payment, but can pay something, you may be able to request a mortgage modification and request a lower monthly payment for a longer period of time.
  • Reinstatement (lump sum) – if you can pay all your missed payments at once. Note: if your bank requires a lump sum payment, you have the right to ask about other options.

However, if you are still financially struggling due to COVID-19 related reasons (illness, unemployment, etc…), there still may be some help.

New York State Mortgage Forbearance – Section 9-x

Do you have a mortgage backed by a bank in New York? Due to the COVID-19 pandemic, on July 17, 2020, New York signed into law an update to their banking rules. One of these rules, Section 9-x, contained new parameters on mortgage forbearance when it comes to New York regulated banking organizations.

Part of Section 9-x is directed towards persons behind on their mortgages due to COVID-19 and says that if the lender cannot offer a modification acceptable to the borrower, then it needs to put what is owed on the back of the loan (see deferral or partial claim above).

Another part requires banks (and other lending entities) offer up to 180 days of forbearance to qualified mortgage holders. If you have passed that 180-day threshold, and can still demonstrate continued hardship, you can be offered an additional 180 day forbearance.

For more information on Section 9-x:

https://www.dfs.ny.gov/apps_and_licensing/mortgage_companies/mortgage_forbearance_statute_sect9x_faqs

https://www.nysenate.gov/legislation/laws/BNK/9-X

Federal Mortgage Forbearance – Section X

If you have a federally backed mortgage (such as Fannie Mae, Freddie Mac, HUD/FHA, VA, and USDA), you may also be able to ask for an extension. For Fannie Mae, Freddie Mac mortgages, you must have been in an active forbearance plan as of February 28, 2021. For HUD/FHA, VA, and USDA you must have been in an active forbearance plan as of June 30, 2020.

On June 28, 2021, the Consumer Financial Protection Bureau (CFPB) released a new program – Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X.

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Starting on August 31, 2021, and ending on December 31, 2021, this new rule offers certain additional COVID-19-related loan modification options.

  • “First, to be eligible, the loan modification may not cause the borrower’s monthly required principal and interest payment to increase and may not extend the term of the loan by more than 480 months from the date the loan modification is effective.”
  • “Second, if the loan modification permits the borrower to delay paying certain amounts until the mortgage loan is refinanced, the mortgaged property is sold, the loan modification matures, or, for a mortgage loan insured by the Federal Housing Administration (FHA), the mortgage insurance terminates, those amounts must not accrue interest.”
  • “Third, the loan modification must be made available to borrowers experiencing a COVID-19-related hardship.”
  • “Fourth, the borrower’s acceptance of an offer of the loan modification must end any pre-existing delinquency on the mortgage loan or the loan modification must be designed to end any pre-existing delinquency on the mortgage loan upon the borrower satisfying the servicer’s requirements for completing a trial loan modification plan and accepting a permanent loan modification.”
  • “Finally, the servicer may not charge any fee in connection with the loan modification and must waive all existing late charges, penalties, stop payment fees, or similar charges that were incurred on or after March 1, 2020, promptly upon the borrower’s acceptance of the loan modification.”

Read the entire rule here – https://www.federalregister.gov/documents/2021/06/30/2021-13964/protections-for-borrowers-affected-by-the-covid-19-emergency-under-the-real-estate-settlement

Reaching Out for Help

There are a number of ways the right Mortgage Forbearance lawyer can guide you through the various rules and regulations that seem to be changing almost every day.

If you live in New York, and you’d like to talk directly to a compassionate, knowledgeable, human being, reach out to New York Mortgage Forbearance attorney Ronald D. Weiss, P.C. for a free consultation. He can walk you through the process of getting the help you need. Call 631-271-3737 and take the first step to a fresh start.

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