Foreclosures And Covid-19 – Legal Help

Current Covid Cases and Deaths

With cases of COVID-19 now at 586,057, where only 43,637 have recovered, while 23,604 have lost their lives, there is significant damage that’s been dealt to America’s economy. The sad fact is that we are not sure of when this pandemic will end and so the numbers may continue increasing in the foreseeable future. Already, companies have started laying off employees, and the number of people applying for jobless benefits has significantly increased over the past four weeks.

This is a clear indication that most Americans are already facing hard times financially as a result of COVID-19. Now, since most people have no jobs to provide them with income, rent payment, and even mortgage payment may become impossible for a good number of Americans.

So, what is being done to provide relief and halt possible foreclosures?

Some good news to homeowners is that some of the banks providing mortgages have put in place financial relief programs to provide relief to their clients. Some of the measures include deferment of mortgage payments over a specified period and interest fee reduction.

But what is the government doing to help its citizens facing possible foreclosures?

1.      Federal Mortgages

On the 18th of March 2020, the Department of Housing and Urban Development, the Federal housing finance agency, and the Federal Housing Administration issued a moratorium protecting single-family owners from foreclosures and evictions for a period of 60 days; hoping that the COVID-19 pandemic shall have passed by then.

It is important to note that the issued moratorium is only applicable to cases where the federal government has a direct financial interest on the property. Though the CARES Act is meant to cover residents until the 17th of May 2020, you can still request for an extended forbearance. This protection covers federal securitized mortgages. The CARES Act has clear guidelines on the property that qualify for forbearance.

Forbearance under the CARES Act

Even if COVID-19 ended tomorrow, not most people would be able to resume their monthly payments immediately. And for such homeowners, getting forbearance relief is the best option. However, it is important to note that you can only apply for this between now and the time before the COVID-19 National Emergency is ended.

Definition of Forbearance on your Mortgage

When talking about “forbearance” under the CARES Act, this is permission granted by your lender to you, giving you permission not to pay your monthly mortgage payments for a given period, usually 180 days. During the forbearance period, your lender will not consider the loan as defaulted. The Act also ensures that no charges are levied on a loan under forbearance.

However, it is important to note that a loan forbearance does not mean that the loan is written off for that period. Once the forbearance period ends, all the payments you will have missed will be due for payment immediately. If at that point you lack the capacity to pay the loan at once, you can file for a Chapter 13 bankruptcy so that your repayment plan is modified.

There is no guarantee that your Chapter 13 application will be accepted, and it is for this reason that you should not ask for a forbearance if you are better off paying the monthly payments. Consult with an attorney on the best way to proceed with such a situation.

Loans protected by the CARES Act

If your property falls in either of the categories below, then it is protected under Section 4022 of the amended CARES Act.

  • Fannie Mae Loans – you can check if your loan is owned by Fannie Mae here.
  • Freddie Mac Loans – click hereto check whether your mortgage loan is owned by Freddie Mac.
  • FHA Loans – if your mortgage is insured by the Fair Housing Administration, then you are also under the foreclosure protection. If you are not sure if your mortgage loan is insured by the FHA, you can check your loan documents for an FHA number, or your monthly loan statements to see if you are paying premiums for an FHA mortgage.
  • USDA Direct Loans – if your monthly mortgage statements come from the USDA Rural Housing Service, your property also qualifies for the foreclosure protection.
  • USDA Guaranteed Loans – it is important for you to note that there is a difference between a USDA Direct loan and the USDA Guaranteed loan. While the monthly statements come from the USDA in the direct loan, for the USDA Guaranteed loans, the monthly statements are issued by private loan servicers. You can call your servicer to confirm if your loan is guaranteed by USDA or check on your documents.
  • VA Loans – all loans that are guaranteed by the Veterans Administration.

If your loan does not fall in any of the categories listed above, you can contact your lender to ask for payment relief, as we battle the COVID-19 crisis.

2.      Private Bank Mortgages

It is important to note that the CARES Act provides no protection for those people with mortgages being serviced by private banks. In this case, your best option is to contact your bank or a foreclosure lawyer for further assistance.

Even though governors like Tim Walz have issued orders that banks hold off foreclosures during COVID-19, the private banks are not under obligation to follow the directive. That is why you should not assume your mortgage payments based on such orders. Instead, contact your bank and get further directions.

Why you should work with an attorney

Working with an attorney during this COVID-19 period is important if you do not want to lose your home due to your lack of capacity to service mortgage loans. There are legal aspects to most processes, including seeking a forbearance or filing for chapter 13, and you may not have the knowledge on how to proceed. That is why you need the services of an expert foreclosure attorney like Michelle Labayen.

Over the many years that Michelle has served as an attorney, she has handled countless bankruptcy and foreclosure cases. This has given her the expertise required to properly guide you on the best course of action.

The pain that COVID-19 has inflicted is already too much to bear, losing your house during this period will only make things worse. Make the right choice and work with an attorney.

Michelle Labayen

Michelle Labayen

Michelle Labayen has been practicing Consumer and Bankruptcy law for more than 16 years. She is a member of the National Association of Consumer Bankruptcy Attorneys (NACBA), and the National Association of Consumer Attorneys ( NACA).

In addition, she is a Max Gardner Bootcamp graduate. Extensive experience has given Michelle a thorough understanding of bankruptcy, including:

  • Chapter 7
  • Chapter 13
  • Adversary Proceedings
  • Litigation under the Fair Credit Reporting Act
  • Litigation under the Fair Debt Collection Practice Act

68% of Student Loans Are Changing Servicers in 2021

In 2021, the Department of Education is going to reduce their 11 services down to 5 student loan servicers. According to Business Insider, the DOE outlined a plan to reduce their service in order to “better customer service.” Only 3 servicers of the original 11 will continue in 2021: Edfinancial, MOHELA, and Maximus.

Read More »

What Navient’s Lawsuit Settlement Means for Your Student Loans

Back in 2018 nine teachers filed a lawsuit against Navient, one of the government’s student loan servicers for misleading borrowers or blocking them from accessing a public service loan forgiveness program. According to the New York Times, out of the 146,000 applicants to the program at the time, only 3,200 saw their student loans forgiven.

Read More »

Contact Michelle, today, and get on the path to financial freedom.

The Law Office of Michelle Labayen, LLC Can Help With The Bankruptcy Process

Anyone can qualify to file for bankruptcy. There isn’t an exact amount of debt or financial difficulty required. You don’t have to show insolvency or meet a certain standard.

You should always speak with a lawyer before beginning the bankruptcy process to ensure it’s the best option for you. Michelle Labayen is a knowledgeable and experienced bankruptcy attorney with offices in New York, NY, and Newark, NJ. Florida licensed attorney Drew Gaddis is counsel and would be representing all clients in Florida.

Miami Bankruptcy Office

100 SE 2nd St Suite 2000 #A
Miami Tower
Miami, FL 33131
Phone: (786) 209-2327