COVID-19 Resources for Homeowners

The NC Homeowners Alliance wanted to put the most critical information for homeowners in one place. On this page, you will find what you need to know about mortgage relief and finances during this crisis. We will update this page as needed.

 

Mortgage Relief

The federal government has mandated mortgage forbearance for all federally-backed loans. This mandate covers the majority of loans in the marketplace. Steps to take depend on which agency backs your loan. A good place to start is this Consumer Reports guide.

In addition, the National Association of REALTORS recently provided guidance on the difference between mortgage forbearance and mortgage deferment.

Update May 18: Both Freddie Mac and Fannie Mae recently announced that homeowners who have had to miss payments due to Covid-19 can defer those payments to the end of the loan.

Additional information can be found through the federal mortgage entities and agencies:

 

Census 2020: Count Yourself In

Whether you live in a rural, suburban or urban community, your response to the 2020 census will influence how billions of federal dollars flow into your community over the next decade. This funding supports programs in your community that expand housing, grow jobs, support emergency service workers and much more. Count yourself in on decisions that shape the future of your community and your country!

Complete your Census response at the Census Bureau.

You can also learn more about the importance of the Census at Home Ownership Matters.

 

Buying/Selling a Home

The National Association of REALTORS have created a guide for their membership concerning property transactions and other matters. If you are a homeowner with property for sale or under contract, there is useful information for you.

 

Does the HUD/FHFA moratorium on foreclosures cover everyone in the country?

No, the moratorium only affects borrowers with mortgages backed by Fannie Mae, Freddie Mac, FHA, VA and RHS. This does not apply to the roughly 35% of mortgages held in bank portfolios and private label securities, but some lenders are offering relief.

The HUD notice(link is external) only applies to FHA single family mortgage borrowers and Home Equity Conversion Mortgage (HECM) borrowers. The moratorium is set for 60 days (through May 16th). FHFA has also directed(link is external) Freddie Mac and Fannie Mae to do the same. Homeowners should check with their mortgage servicer/lender.

My company’s offices are closed, and I am having a hard time providing my final verification of employment within the 10 days prior to loan closing.

FHA(link is external) and RHS(link is external) are allowing verbal verification of employment – meaning your employer can provide this by phone. RHS is also allowing email verification. If you cannot get either of these, the lender will require higher reserves to cover risk.

Fannie Mae and Freddie Mac will allow verbal verification when available and an email verification under certain conditions. They have also made other forms of temporary verification available in order to help with verification while social distancing.

I have heard that the FHA, Fannie Mae, and Freddie Mac have raised rates and fees on borrowers with lower credit scores or smaller down payments?

These claims are not true. To date, neither the FHA nor Fannie Mae and Freddie Mac have made any changes to credit scoring or down payment requirements. The only change they have made for borrowers is to allow MORE flexibility in how a lender can verify employment.

Some individual lenders are adding their own, higher standards on these products. The rational is that the cost of servicing these loans has surged due to the widespread forbearance that is taxing servicers’ resources. Under forbearance, the servicer must continue to pay PITI to the investor, but the sheer volume of forbearance to deal with the COVID-19 response is unprecedented. Since lower-credit borrowers are more likely to take forbearance and servicing is harder to get, lenders are less willing to extend this credit regardless of the FHA or GSEs’ standards.

NAR wrote to the Treasury, Federal Reserve, and the Federal Housing Finance Agency requesting that they do more to help servicers deal with the unprecedented demands on funds due to broad servicing. Improving servicing is one key to improving the flow of funds to borrowers and homeowners.

Ginnie Mae has announced the creation of a new program(link is external), that should help alleviate lender concerns and improve access to mortgage financing. The program will provide cover for lenders by advancing them the money so they can make the required pass-through payments to investors during the forbearance period. They anticipate this new program to be available in about 2 weeks.

My lender indicated that the IRS has shut down and they cannot process loans without an income verification document that only the IRS can generate. Is this true?

Luckily, there is precedence for an IRS closure based on several recent government shutdowns. Some lenders may require this document, but Fannie Mae and Freddie Mac do not, so this is a lender overlay.

Fannie and Freddie both issued guidance in January 2019 following the then government shutdown to note that they do not require the 4506T IRS tax transcripts at closing. Rather, they only require a request for the document be signed by the borrower. However, they do require the tax transcript be submitted as part of their post-closing review. We have asked both Fannie and Freddie to clarify and publish updated guidance given the unique challenges that the response to COVID-19 presents.

Furthermore, the IRS reopened this facility during the shutdown as it was deemed essential. We have reached out to the IRS on this point.