Debunking Myths about Mortgage Assistance during COVID-19 Pandemic

Myth: I should wait until I miss a mortgage payment, when experiencing a financial hardship related to COVID-19, before contacting my mortgage servicer.
Fact: If you are experiencing a financial hardship related to COVID-19, don't wait. Contact your mortgage servicer (the company that receives your monthly mortgage payments) today to learn about the mortgage assistance options available to you. You can discuss a forbearance plan that allows you to either pause or lower your monthly mortgage payments for a period of time to regain your financial footing. Reach out to your mortgage servicer while you are still making your monthly mortgage payments, so you can avoid any negative impacts like delinquent credit reporting or late fees. Check out our Here to Help page for resources and information about a forbearance option.

Myth: Forbearance plans are no longer offered now that States are beginning to reopen.
Fact: Once you experience a hardship contact your mortgage servicer to discuss a forbearance plan. Forbearance plans are still available for borrowers who are impacted by COVID-19.  If you have a financial hardship related to COVID-19 that impacts your ability to make your monthly mortgage payment, you may be eligible for a forbearance plan. The most important step is to contact your mortgage servicer as soon as the hardship begins to discuss your financial situation.

Myth: Setting up a forbearance plan with my mortgage servicer will be a long and complicated process.
Fact: The forbearance plan process involves three simple steps. In some cases, you may be able to request assistance online. Learn more about the forbearance process here.

Myth: I need to have extensive documentation to show my finances have been impacted by COVID-19.
Fact: If you are experiencing a financial hardship related to COVID-19, you do not have to provide extensive documentation to show that your financial circumstances have been impacted by COVID-19. Before reaching out to your mortgage servicer, check the company’s website to see what information they provide about forbearance plans and how to apply. Before you speak with a representative, have your mortgage loan account number available, and be prepared to ask questions about your mortgage payment assistance options, including your ability to obtain a forbearance plan.

Myth: There is minimal support to help me determine if a forbearance plan is the right option for my situation.
Fact: Fannie Mae's housing counseling service is a resource you can utilize. When you call 877-833-1746, HUD-approved housing counselors can develop a personalized action plan, explain mortgage relief or rental assistance programs, provide financial coaching, and support your successful recovery for up to 18 months.

Myth: I will have to pay the missed amounts all at once when the forbearance plan ends.
Fact: A mortgage forbearance plan does not result in reducing or forgiving the amount you owe. You will have to make payment arrangements to cure all unpaid amounts once the forbearance plan ends. However, you do not have to pay the missed amounts all at once, unless you can afford to do so. If you can, this will reinstate your loan and you can go back to making regular monthly mortgage payments. You may also consider working with your mortgage servicer to pay a portion of the missed amounts in addition to your regular monthly mortgage payments within a given time period, until all unpaid amounts have been repaid (also known as a repayment plan). Another option is Fannie Mae's COVID-19 payment deferral, where the missed amounts are deferred into a non-interest-bearing balance due on the last mortgage payment date (or earlier whenever the home is sold, the loan is refinanced or otherwise paid off). If these are not viable repayment solutions, remain in contact with your mortgage servicer to discuss modifying the terms of your mortgage to repay the total amount due. Find out more about COVID-19 relief options here.

Myth: A forbearance plan will negatively impact my credit score.
Fact: Your mortgage servicing company should report your loan as current to credit reporting companies if you were current on your monthly mortgage payments before receiving a forbearance or other payment accommodation related to COVID-19 as long as you have made any forbearance plan or other COVID-19-related accommodation payments (or no payments) as required by your plan. Make sure to monitor your credit reports to find and resolve any inaccurate information.

Myth: If I enter a forbearance plan, I will be ineligible to refinance or get a new mortgage loan.
Fact: You may be eligible for a refinance or a new mortgage loan if you are in forbearance but have continued to make timely payments. You may also be eligible for a refinance or a new mortgage loan if you were previously in forbearance but have resolved any missed payments through a reinstatement or have made three timely payments either in accordance with a repayment plan or following a payment deferral, or completed the trial period plan payments in connection with a modification. Contact your mortgage lender to discuss your options as other eligibility requirements may apply.

Myth: If I contact my mortgage servicer and ask about a forbearance plan, they will automatically put me on a forbearance plan.
Fact: Your mortgage servicer should not automatically put you on a forbearance plan. If you contact your mortgage servicer about a forbearance plan, your mortgage servicer will provide guidance to help you determine your options. If you request a forbearance and are eligible, your mortgage servicer will communicate the next steps and provide you with an agreement that summarizes the terms of the forbearance plan.

Myth: If I am unintentionally placed on a forbearance plan and prefer not to be on one, I have to remain on the forbearance plan for the duration of the forbearance period.
Fact: If you were placed on a forbearance plan but did not request one you should contact your mortgage servicer immediately. You do not have to accept a forbearance plan that you did not request. If you are experiencing a hardship and need assistance, your mortgage servicer should discuss your options.