Everything you need to know about ‘mortgage forbearance’ and skipping mortgage payments during the pandemic

April 8, 2020, 2:45 PM UTC

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Yet another feature of the federal government’s coronavirus stimulus package is struggling to work as intended.

This time, it’s the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s provisions around mortgage forbearance. While the bill sought to alleviate the financial burden on homeowners by allowing them flexibility on mortgage payments, the measures have thus far been plagued by vagaries and confusion among lenders and borrowers alike.

What’s clear is that the idea of delaying one’s mortgage payments during these economically trying times has proved exceptionally popular; forbearance requests have escalated in dramatic fashion in recent weeks. According to the Mortgage Bankers Association, requests grew by 1,270% between the week of March 2 and the week of March 16, and another 1,896% between the week of March 16 and the week of March 30. The percentage of loans in forbearance has also gone way up.

With more homeowners sure to be in need of help in the weeks and months to come, here’s what you need to know about the CARES Act’s mortgage forbearance measures.

What is forbearance on a mortgage loan?

Forbearance is an agreement between a mortgage lender and a borrower/homeowner to pause or reduce mortgage payments for a period of time, without the borrower running the risk of falling into default on his or her loan. Forbearance is not forgiveness; the borrower is expected to repay any delayed or reduced payments in the future.

Who qualifies for mortgage forbearance?

Usually, homeowners who are coping with financial hardship can apply for forbearance with their mortgage lenders. Under the CARES Act, homeowners with a federally backed mortgage who are experiencing financial hardship because of the coronavirus pandemic have the right to request forbearance.

Additionally, the CARES Act also puts a temporary moratorium on the foreclosure of any federally backed residential mortgage over a 60-day period beginning on March 18 (and running through May 17). Foreclosure proceedings commenced before the bill’s passage are not exempt from the moratorium.

How long does mortgage forbearance last?

Under the CARES Act, eligible homeowners can request a forbearance period of up to 180 days, or around six months. Additionally, they have the right to request one extension for an additional 180-day forbearance period, which would extend the total forbearance to up to 12 months.

How do I apply for mortgage forbearance?

The Consumer Financial Protection Bureau (CFPB) recommends calling your mortgage servicer by phone to request a forbearance, while acknowledging that it “may take a while” to get someone on the phone—a documented complaint by many would-be applicants already. Upon being connected with a representative, homeowners should be prepared to explain why they’re unable to make their payments and detail their financial situation. 

What if I don’t have a federally backed mortgage?

The majority of residential mortgages in the U.S. are backed by Fannie Mae, Freddie Mac, or another government entity. But if your mortgage is not, the CFPB suggests contacting your servicer anyway—noting that regulators have encouraged financial institutions to work with borrowers who are in need of forbearance to find a solution. Additionally, some states may have their own, unique mortgage relief options outside of those offered by the CARES Act.

Which banks are offering mortgage forbearance?

Any financial institution that provides federally backed residential mortgages to homeowners is required to participate in the CARES Act’s mortgage forbearance and foreclosure provisions. 

Are there fees associated with mortgage forbearance?

No. Under the CARES Act, eligible homeowners who receive mortgage forbearance must not be subject to any additional fees, penalties, or interest beyond what would normally be charged.

Does mortgage forbearance affect your credit score?

No. If you are granted forbearance under the CARES Act, servicers are prohibited from reporting the resulting late or missed payments that could impact a borrower’s credit.

How do I repay the amount that I owe?

This is an area that has caused a good deal of confusion so far. It appears that different lenders are requesting varying repayment plans from borrowers once the forbearance period has ended; some homeowners are reportedly being asked to repay the amounts once in forbearance in one lump sum, rather than modifying their monthly payments or tacking on the suspended payments to the end of their loans.

As some observers have noted, the CARES Act does not provide guidelines on how borrowers are expected to repay what they owe after the forbearance period ends—so homeowners should be sure to know their servicer’s stance on the matter.

More must-read personal finance coverage from Fortune:

—What to do if you can’t pay your bills this month
—Everything you need to know about the coronavirus stimulus checks
—5 things to know about unemployment benefits in the COVID-19 stimulus package
Everything you need to know about furloughs—and what they mean for workers
—What to know about the new 401(k) no-penalty withdrawals
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—VIDEO: 401(k) withdrawal penalties waived for anyone hurt by COVID-19

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