How does the “CARES ACT” in response to COVID-19 help me with my Mortgage?

There was a time when we thought  Y2K was the end of the world, but truth be told, what we are facing as a society and worldwide falls nothing short of a nightmare and although it may not be the end of the world, it sure does feel like it. It’s highly recommended to stay home and practice Social Distancing. The sooner we can control the invisible terrorist, the sooner we can continue our usual lives. Our homes are supposed to be our safe-havens. They protect us and keep us out of harm’s way, but how do we protect our homes from the very thing that is threatening our families, our health, and our livelihood? By being well informed and placing our ducks in a row.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (a/k/a the Cares Act”) was signed into law by our Federal government. During the last few days, we’ve heard many people thinking and assuming that ALL loans will be backed by the CARES ACT. However, this is a misconception.

The CARES Act foreclosure and forbearance provisions apply only to “federally backed mortgages.” It is crucial to determine if a loan is federally backed and which investor is the backer [i.e., Fannie Mae, Freddie Mac, Federal Housing Administration (“FHA”), Veterans Affairs (“VA”), and the U.S. Department of Agriculture’s Rural Home Service (“RHS”). ] If you are unable to make payments towards your mortgage and it is a “federally backed mortgage” you may be able to delay making payments temporarily. During that temporary time you may not: (i) incur late fees; (ii) have delinquencies reported to the credit bureaus, and (iii) be subject to Foreclosure and other legal proceedings due to their suspension during that time period. 

It is imperative that you keep in mind that the temporary relief period is only a temporary suspension of your obligation to your mortgage payments. The temporary relief period does NOT absolve your monetary obligation. For example, if the temporary relief period lasts 6 months, then you are expected to pay back those 6 months in due time. It is not permanent forgiveness, but temporary forgiveness. 

If at the end of the temporary relief period, if you are still facing the challenge or inability to make payments, additional assistance may be available. If you are unsure if your loan is federally backed or need help in obtaining loan assistance, it is important to consult an experienced attorney to learn how you can protect your investment. There are several things you can do to avoid foreclosure, especially if you act as soon as possible. For more information on the foreclosure process, contact The Law Office of Ray Garcia, P.A. at 305-227-4030 or legal@raygarcialaw.com, anytime.