April 1, 2020
Federal and state governments are requiring lenders to help people who cannot afford to pay their mortgage and rent. Here is information on the programs in the Tri-state area and for the U.S.
New Jersey
Governor Phil Murphy announced last week that the state is initiating a 90-day mortgage grace period for families impacted by the COVID-19 crisis. National mortgage lenders such as Citigroup, JP Morgan Chase, US Bank, Wells Fargo, and Bank of America, as well as many other lenders and mortgage providers have agreed to partner with New Jersey on this initiative. In addition, those institutions will:
- Provide borrowers with a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
- Confirm approval of and terms of forbearance program; and
- Provide borrowers with the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.
For at least 90 days, financial institutions will also waive or refund at least the following for customers who have requested assistance:
- Mortgage-related late fees; and
- Other fees, including early CD withdrawals (subject to applicable federal regulations).
The 90-day grace period cannot be used to downgrade anyone’s credit rating, and late fees and other associated costs would also be waived.
For at least 60 days, financial institutions will not initiate foreclosure sales or evictions, consistent with applicable guidelines.
“This announcement builds on the moratorium on removals of individuals pursuant to foreclosures or evictions that I previously instituted in
Executive Order 106
,
”
Governor Murphy explained. “Today, we are going further and announcing that these financial institutions are committing to not initiate foreclosure sales or eviction proceedings for at least 60 days.”
He added, “I urge financial institutions and credit card companies to do the right thing, like lowering credit card interest rates, waiving late fees and exercising compassion when people call with their financial hardships.”
Governor Murphy stressed that, under the Executive Order, “a landlord can’t kick you out of your home … period! For landlords getting mortgage relief today, we expect them to provide similar relief to their tenants.” Renters can visit the state’s portal at
covid19.nj.gov
for rental assistance information.
Federal Government
Mortgage buyers Fannie Mae and Freddie Mac announced that they will suspend foreclosure and evictions of borrowers in single family homes owned by their companies.
Under Fannie Mae's guidelines for single-family mortgages:
- Homeowners who are adversely impacted by this national emergency may request mortgage assistance by contacting their mortgage servicer.
- Foreclosure sales and evictions of borrowers are suspended for 60 day.
- Homeowners impacted by this national emergency are eligible for a forbearance plan to reduce or suspend their mortgage payments for up to 12 month.
- Credit bureau reporting of past due payments of borrowers in a forbearance plan as a result of hardships attributable to this national emergency is suspended.
- Homeowners in a forbearance plan will not incur late fee.
- After forbearance, a servicer must work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification.
Meanwhile, Freddie Mac’s mortgage relief options for borrowers impacted by COVID-19 include:
- Ensuring payment relief by providing borrowers forbearance for up to 12 months.
- Waiving assessments of penalties or late fees against borrowers.
- Suspending the reporting of delinquency related to forbearance, repayment or trial plans to credit bureaus.
- Allowing servicers to offer borrowers additional loss mitigation options that are typically only enacted to address natural disasters. This includes loan modifications that give servicers options to provide payment relief or keep the payment the same post the forbearance period.
The action, ordered by Fannie and Freddie’s federal regulator, is among many efforts nationwide to protect those affected by the coronavirus pandemic. The companies have been under the control of the federal government since the 2008-09 financial crisis. In addition, the U.S. Department of Housing and Urban Development similarly suspended foreclosures and evictions for mortgages insured by the Federal Housing Administration.
Pennsylvania has a resource page with lots of useful information for
consumers
who are experiencing financial difficulties due to COVID-19 and need help. Included is information on what to do if you cannot pay your mortgage or rent.
New York
has a program that is similar to the one in New Jersey. We will share more details as they become available. Please visit our
COVID-19 Resource Page
for more updates.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at
Richard.Higgins@MCC-CPAs.com
. I can be reached at
Marty.McCarthy@MCC-CPAs.com
.
As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
