Homeowners can request mortgage forbearance for nearly a full year.
Topline: The $2 trillion economic stimulus bill passed unanimously by the Senate late Wednesday after six days of negotiations includes sweeping protections for homeowners who are experiencing financial hardship as a result of the coronavirus outbreak.
- The bill would allow homeowners with federally backed mortgage loans to request loan forbearance—that is, delayed payment—for an initial period of 180 days, and that forbearance could be extended for another 180-day period if necessary.
- Homeowners must contact their mortgage servicers directly in order to request the forbearance.
- The bill also halts foreclosures on properties with federally backed loans.
- Those with federally backed multifamily mortgages are also covered: borrowers who are current on their payments can request forbearance for up to 90 days.
- Mortgage companies like Quicken Loans, who would still be on the hook for interest and principal if borrowers miss mortgage payments during the crisis, have been lobbying Congress to establish a lending program worth billions of dollars to help them keep up with payments; that lending program would make it possible for more homeowners to obtain forbearance agreements.
Key background: The federal government and state governments have already stepped in to ramp up protections for homeowners and renters who are struggling as a result of the coronavirus outbreak. President Trump ordered the Department of Housing and Urban Development (HUD) to suspend evictions and foreclosures for 30 days, though that moratorium only applies to those with mortgages secured by the Federal Housing Administration. Fannie Mae and Freddie Mac are providing payment forbearance to borrowers impacted by the coronavirus for up to one year. California has halted all evictions until May 31, Kansas has temporarily prohibited evictions and foreclosures across the state until May 1, and New York Governor Andrew Cuomo announced last week that mortgage payments will be suspended for 90 days.
Tangent: The Washington Post reports that in its interviews with more than a dozen small business owners and workers who have been laid off, nearly all said that an April rent or mortgage payment was their biggest concern.
What to watch for: The House is expected to vote on the bill on Friday, and President Trump is expected to sign it after that.