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 is 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 penalties or late fees.  At the end of the forbearance period, you can apply for a loan modification to help you get caught up on your payments. But loan modifications are not guaranteed. There may also be other options to catch up on your payments. Talk to your servicer.

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. 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 for these kinds of mortgages are available from March 27 until December 31, 2020, or the end of the COVID-19 emergency, whichever comes first.

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.  

Federally-Backed Mortgages
On March 27, the Federal CARES Act was signed. This Act suspends foreclosures from March 18 – May 17, 2020, for the following types of federally-backed mortgages:

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

If your mortgage is with one of these, your servicer could not start a foreclosure, hold a foreclosure sale, or evict anyone from March 18 – May 17, 2020.

On May 14, the Federal Housing Finance Agency extended the foreclosure suspension through June 30, 2020 for FHA, VA, USDA, Fannie, and Freddie backed mortgages. If your mortgage is with one of these, your servicer cannot start a foreclosure, hold a foreclosure sale, or evict anyone until after June 30, 2020.

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's executive order asks banks to hold off on foreclosures caused by COVID-19. It also asks banks to not charge fees for late mortgage payments. BUT it does not require banks to do those things. Contact your servicer right away and ask for information and options directly from them.

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 are suspended for 60 days from March 18 – May 17, 2020. Most reverse mortgages are backed by the federal government and HUD. Save as much money as you can now. You want to be able to make your repayment plan or property tax payments as soon as possible.

You are ok during the peacetime emergency we are in. Governor Walz issued an executive order saying that “mortgage holders” (your servicer) can’t evict people from a foreclosed home after the redemption period ends. Evictions in Minnesota are suspended at least through June 12.

A bank or servicer could still file the eviction, and it may show up on your record, but the courts aren’t scheduling eviction hearings during this peacetime emergency.

Hennepin County Court has announced that non-emergency eviction filings made after March 26 will be marked “confidential” during the crisis. This means it would not show up in your record, at least during the 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 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.