Millions of Americans have seen their income dry up over the past few months. Millions have been furloughed from work, or lost their jobs altogether. While Maryland and other states have made tentative steps to reopen the economy, no one really knows when, or if, these jobs will come back.
It’s a frightening time, and many Americans are facing terrible economic pressure.
Fortunately, the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act has introduced some new programs that can help.
For homeowners, the CARES Act provides residential mortgage relief in the form of deferrals and forbearance programs These apply only to federally-backed mortgages, including those backed through Freddie Mac/Fannie Mae, FHA and USDA. Altogether, these back about 50% of the residential mortgages in the country. The CARES Act gives borrowers the option to apply for 180 days of deferral, followed by another 180 of forbearance, meaning that qualifying homeowners have more time to get their finances in order before they have to start worrying about the possibility of foreclosure.
The CARES Act does not require private lenders to offer the same types of relief, but it does encourage them to do so. In times of economic instability, many private lenders are open to renegotiating terms with borrowers. From a lender’s perspective, it may be better to give borrowers more time to pay back their mortgages than to go through the work of foreclosure, especially when new buyers may be scarce.
For some struggling homeowners, the best way to avoid foreclosure and save their homes may be through filing for personal bankruptcy protection. A debt relief attorney can help people assess their options and find the best path toward returning to financial security. The CARES Act gives people a little time to get started.