COVID-19: Mortgage Payments and Foreclosures During the Pandemic

Call your mortgage servicer right away. Your servicer is the company or bank you send your mortgage payments to every month. Do not stop making payments without talking to them.

You also have a mortgage lender. This may be different than your servicer. The lender owns your mortgage. If you don’t know who your lender is, ask your servicer. What rules apply to you depends on your lender.

Federally-Backed Mortgages
For many loans, servicers have to offer you forbearance options if you ask for help because your income has been affected by the COVID-19 emergency. Forbearance means your payments are not due until the end of the forbearance period. A forbearance can be up to 12 months. You still owe all your mortgage payments for that time, but they can’t charge you late fees or report missed payments to the credit bureaus.

At the end of the forbearance period, you need to work with your servicer to start making payments again, and to deal with the payments you missed in the forbearance. There may be multiple options to catch up on your payments. Talk to your servicer before your forbearance ends.

If you ask for help, servicers have to offer forbearance options for the following types of federally-backed loans:

• FHA
• HUD Reverse Mortgage
• VA
• USDA
• Fannie Mae
• Freddie Mac

If you have one of these loans and need a forbearance, contact your servicer and tell them that you are having financial hardship due to COVID-19. They should give you a forbearance without asking for documentation that proves your hardship. Forbearances can be up to 12 months, but you may have to re-ask your servicer for the forbearance at different times during the 12 months. Pay attention to any dates or deadlines your servicer gives you. 

For example: Sarah was approved for a 3-month forbearance by her servicer, for April, May, and June 2020. Sarah kept losing income during this time because of COVID-19. She called her servicer at the end of June to extend her forbearance for another 3 months - July, August, and September 2020. If she keeps losing income because of COVID-19, she can keep applying for forbearance extensions for up to a total of 12 months.

Forbearance options options for VA mortgages were available until December 31, 2020.

Forbearance options for Fannie Mae and Freddie Mac, FHA, USDA, and HUD reverse mortgages are available until February 28, 2021.

Private Bank Mortgages
If your mortgage is not a federally-backed mortgage like the ones listed above, it is owned by a private bank. If that is the case, your servicer does not have to offer forbearance options. But your servicer may voluntarily offer a forbearance or have other COVID-related options. Contact your servicer right away and ask for information and options directly from them.  

Starting July 1, 2020, some banks and credit unions in Minnesota agreed to offer up to 90-day forbearances. See the Minnesota Attorney General’s announcement for a list of the participating banks and credit unions, and more information on the agreement and how these forbearances will work.

Federally-Backed Mortgages
Several laws suspend foreclosures right now. How long foreclosures are suspended depends on what kind of mortgage you have. During the foreclosure suspension for your type of mortgage, your servicer cannot start a foreclosure, hold a foreclosure sale, or evict anyone after a foreclosure.

• For Fannie Mae and Freddie Mac, FHA, USDA, VA, and HUD reverse mortgages, foreclosures are suspended until February 28, 2021. Fannie Mae and Freddie Mac: this is only for properties owned by Fannie and Freddie (real estate owned, or “REO” properties). In other words, this suspension does not apply to you if a third party bought your home at a foreclosure sale.

Check back here for more updates as they come in.

Private Bank Mortgages
The Federal CARES Act does not apply to private bank mortgages. Contact your servicer or the foreclosing lawyer right away. They might have special programs for people who can’t pay their mortgage. Their contact information should be on any Notice of Foreclosure you got. 

Governor Walz declared a Peacetime Emergency on March 13, 2020. The state Peacetime Emergency goes through February 12, 2021. Evictions in Minnesota are on pause during this emergency. If a foreclosure sale happened during the emergency, or if a redemption period expired during the emergency, you can't be evicted from your home until the emergency is over on February 12, 2021.

Normally, not paying your property taxes or repayment plan can put you in danger of foreclosure. For reverse mortgages backed by the federal government and HUD, foreclosures and post-foreclosure evictions are suspended through February 28, 2021. Most reverse mortgages are backed by the federal government and HUD.

If you are having trouble making your property tax payments or repayment plan payments and your servicer is threatening to put your loan into "due and payable status," or if it is already in "due and payable status," you can ask for a 180 day forbearance. You can also ask for another 180 day forbearance after that, for a total of a 1-year forbearance. Forbearance means your payments are not due until the end of the forbearance period. You have until February 28, 2021 to ask your reverse mortgage servicer for a forbearance.

Call Legal Aid if your servicer is refusing to do this for you.

The time right after the foreclosure sale is called the "redemption period." It can range from 5 weeks to 12 months, depending on your situation and what type of mortgage you had. You have the legal right to live in the home during the redemption period. Read more about this in our fact sheet, Your Rights in Foreclosure.

If you are still in the home after the redemption period ends, you are probably protected by an eviction moratorium. You are ok during the state Peacetime Emergency we are in. Governor Walz issued an executive order saying the new owner of your home(usually your servicer) can’t evict people from a foreclosed home after the redemption period ends. Evictions in Minnesota are suspended through February 12.

If the new owner (your mortgage servicer, bank, or a separate person or company that bought the home) files an eviction or serves you with papers before February 12, 2021:

• Call Legal Aid right away. We have lawyers that can answer your questions about your situation.

• File a complaint with the Attorney General’s Office by using this form https://www.ag.state.mn.us/Office/Forms/TenantEvictionComplaint.asp. You can fill out and submit this form online.
   

You may also be protected from eviction if you have a federally backed mortgage and the new owner of your home is the bank that had your mortgage.

• For Fannie Mae, and Freddie Mac, FHA, USDA, VA and HUD reverse mortgages, you are protected until February 28, 2021.

If the bank files an eviction or serves you with papers before February 28, 2021:

• Call Legal Aid right away. We have lawyers that can answer your questions about your situation.

• File a complaint with the Attorney General’s Office by using this form: https://www.ag.state.mn.us/Office/Forms/TenantEvictionComplaint.asp. You can fill out and submit this form online.
   

If you live in Hennepin County and the new property owner illegally files a non-emergency eviction during the state Peacetime Emergency (before February 12, 2021), the filing will be marked "confidential" during the crisis. This means it does not show up in your record, at least during the state Peacetime Emergency.  

Governor Walz's order suspending evictions does apply to mobile home park lot rentals. This means that a park can’t evict you for not paying your lot rent.

BUT, the federal freeze on foreclosures does not yet apply to mobile or manufactured homes., This means if you are still buying the home, the seller can start a repossession action to take it back and force you out. This is true if you are buying the home from the mobile home park or somewhere else.

If you are buying your home from the park and can only pay for the home payment and not the rent, write clearly on your payment that the money is for the home payment and not the lot rent. If you pay in cash, give them a letter along with your payment saying that. Make sure it is on your receipt from them too.

Note: In order to repossess a manufactured home, a seller has to give 30 days’ notice before filing in court.

If you need help with your heating bill, you might be able to get help from Minnesota’s Energy Assistance Program. They made it easier to get help during the Pandemic. Call 1-800-657-3710, press 1, then enter your zip code to talk with your local Energy Assistance Program.