As the COVID-19 pandemic continues, it brings to bear systemic racial inequity not only in health, but also in housing.
The 2020 US Census Bureau's Household Pulse Survey revealed significant disparities by race and ethnicity, with Black households significantly more likely to miss or defer mortgage payments and experience uncertainty about making their next month's payment than white households.
The Survey also stated that nearly 21 percent of Black homeowners missed or deferred mortgage payments in May 2020, compared with 10 percent of white homeowners and about 13 percent of all homeowners with payments due.
This gap persisted over all Survey weeks, as Black homeowners continue to be disproportionately burdened by the pandemic's impact on employment and financial stability.
Fannie Mae, a leading source of financing for mortgages in the US, is here to help during this difficult time. They offer a range of financial assistance programs to help homeowners and renters stay in their homes, keep their lights on, and stay afloat during times of pandemic-induced economic hardship.
If homeowners are experiencing financial hardship related to COVID-19, they should act immediately.
Homeowners should contact their mortgage servicer to learn about temporary mortgage assistance options, like forbearance plans, which allow them to either suspend or reduce their monthly mortgage payments for a period of time to regain their financial footing and stay in their homes.
Being proactive in seeking assistance options while still able to make mortgage payments allows homeowners the opportunity to work with their mortgage servicer to determine eligibility for mortgage relief, such as a forbearance plan, instead of missing the payments altogether – potentially resulting in negative impacts like delinquent credit reporting or late fees.
Homeowners should ask their mortgage servicer – the company they send their monthly mortgage payment to – some of these pertinent questions:
- Will a forbearance plan negatively impact my credit score?
- What paperwork do I need to show my finances have been impacted by COVID-19?
- If I enter a forbearance plan, can I still refinance or get a new mortgage loan later?
- Will I have to pay the missed amounts all at once when the forbearance plan ends?
A COVID-19 related forbearance plan can provide temporary relief and some financial breathing room, but it does not result in a forgiveness of missed monthly payments. It’s important to remember that we’re talking about suspending or reducing monthly payments for a period of time and then making up the missed payments once the forbearance plan has ended.
At the end of the forbearance plan, homeowners have options for how to repay missed amounts and should talk with their mortgage servicer about the different options prior to the expiration of their forbearance plan.
There are a number of options to repay missed amounts after forbearance:
- Reinstate (pay the total missed payments all at once at the end of forbearance, if the borrower is able to).
- Repayment Plan (pay a portion of the past-due amounts each month for up to 12 months while continuing to make regular monthly mortgage payments).
- Defer payments (move, or defer, past-due amounts to the end of the loan term). This option allows eligible borrowers to bring the loan current and resume regular monthly mortgage payments. The deferred payment does not accrue interest, and there are no other changes to the terms of the mortgage loan. The deferred amounts are due on the maturity date, or earlier sale or transfer of the property, refinance, or payoff of the mortgage loan.
- Modify the loan (permanently change the terms of the mortgage loan, such as the loan term or interest rate, in order to make payments affordable).
Fannie Mae has mortgage assistance solutions to address the needs of homeowners, including those of color. Fannie Mae offers borrowers options for navigating financial hardship – as homeowners work to get back on solid financial footing.