This is the eighth in a series of Law in the Marketplace columns with practical tips on how to use federal and New Hampshire laws and orders to deal with the COVID-19 pandemic.
As readers will know, in the CARES Act, enacted on March 27, Congress passed dozens of provisions to help individuals, families and businesses deal with the unprecedented financial hardships arising from the coronavirus pandemic. For thousands of New Hampshire homeowners, the most important of these provisions are those providing them with “forbearance” from their obligation to make monthly payment on their home mortgage loans.
If you are a homeowner, if your home is subject to a mortgage, and if you’re not familiar with the CARES Act Forbearance Program, the key features of the program are described below.
However, details concerning implementation of the program vary somewhat from lender to lender. Thus, at your earliest opportunity, you should call your lender to learn the details of its implementation of the program.
The key points concerning the forbearance program are these:
— Most conventional home mortgages, including both first and in some cases second mortgages, are covered by the program. This includes Fannie Mae and Freddie Mac mortgages, FHA mortgages, VA mortgages and USDA mortgages. Obviously, your lender will know whether your mortgage fits in any of these mortgage categories, but your mortgage loan agreement will also make this quite clear to you.
— To qualify for the forbearance program, you must be suffering a financial hardship caused by the coronavirus, such a job loss, a furlough, reduced hours of work, or costly medical bills.
— The initial period covered by the forbearance program is 180 days. However, at the end of this period, you can request an additional 180-day period, for a total period of one year.
— Obviously, during the above periods, you will face no risk of foreclosure.
— After the forbearance period ends, you may request an extension of your loan equal to the number of months of mortgage payment deferrals you’ve obtained. Alternatively, you may request an amortization of the amounts deferred over the remaining life of your loan, or, if you’re able, you can pay aggregate deferred amounts in a lump sum.
— You will owe no late payments for any mortgage payments you defer.
— The above deferrals will have no negative effect on your credit score.
— In connection with your request of mortgage payment deferrals under the forbearance program, you won’t have to provide evidence of the hardship that the coronavirus pandemic has caused or is likely to cause for you. However, it goes without saying that any falsification about those hardships may constitute fraud or may cause your lender to demand immediate payment, with interest, of deferred amounts. And it will be prudent for you to compile evidence of these hardships in the course of the forbearance period.
John Cunningham is a Concord tax and business lawyer. He has published “Limited Liability Company Operating Agreements” and “Maximizing Pass-Through Deductions under Internal Revenue Code Section 199A”. Both are the leading books in their fields.