The coronavirus pandemic triggered an economic recession, affecting various industries, including real estate. Some people with mortgage payments are unable to pay their monthly dues because of sudden unemployment. Because of that, the government issued several legislations to help ease the burden on its constituents at the federal and state level.
It is critical to note, however, that the rules explicitly state that the help only covers residents affected by the pandemic. If tenants get involved with criminal activity, they are still eligible for eviction by their landlords. Otherwise, landlords cannot execute their lawful rights as property owners to evict or foreclose tenants affected by the pandemic.
Eligibility for Mortgage Deference
The Consumer Financial Protection Bureau (CFPB) set guidelines for those who are eligible to delay their mortgage payments. If borrowers can pay, the law requires them to do so, especially if they’re still financially stable after paying their dues. However, if borrowers cannot pay their mortgage, CFPB advises them to call their loan provider immediately.
Some loan providers can offer their customers a payment deferral and mortgage forbearance in some cases. When this happens, borrowers should read the entire terms and conditions of the agreement to avoid getting the short end of the stick.
Help for Federal-Backed Mortgages
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows people with mortgage loans backed by the federal government to request forbearance if the borrower experiences monetary problems in this pandemic. The steps are simple and require borrowers to reach out to their mortgage provider.
Under the CARES Act, there can be a deference period of up to 180 days. If the borrower does not pay their dues after 180 days, they continue to apply for a 180-day forbearance extension. The best part about asking for an extension and getting approved is that there are no penalties or sanctions added to your dues—only interest rates apply.
President Trump issued an order on March 18 to suspend any foreclosures and evictions for 60 days, and the Department of Housing and Urban Development (HUD) must comply. However, the order only applies to single families backed by the Federal Housing Administration (FHA). The reasoning behind that is to stop any new foreclosure from occurring and halt the progress of any ongoing foreclosure.
Relief Programs in California
The District of Columbia and all the 50 states have relief programs to cater to the needs of their respective constituents harmed in this COVID-19 era. Residents must remember, however, that the law is subject to change once authorities deem that the situation is already returning to normal. The government is also considering the livelihood of the landlords and money-lending providers.
As a cautionary measure and to fortify the federal government’s order of foreclosure, the Judicial Council of California suspended any foreclosure cases for 90 days. The mandate will last until May, with the possibility of extending if the need continues. The executive order allows renters to delay payment until after the pandemic is over. For the time being, renters can continue to stay inside their rentals without paying rent and worrying about eviction.