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If you are facing financial hardship and may miss a mortgage payment, contacting your loan servicer immediately is the most critical step to protect your home and credit. Under the CARES Act, homeowners with federally backed mortgages may be eligible for forbearance, a temporary payment suspension or reduction, for up to one year. Furthermore, federal foreclosure protections have been established, and your credit score may be shielded from negative reporting during an agreed-upon forbearance period.
Mortgage forbearance is a pre-negotiated agreement with your loan servicer—the company you send your monthly payments to—that allows you to temporarily pause or reduce your mortgage payments. This is not loan forgiveness; you will eventually need to repay the missed amounts, typically through a repayment plan or loan modification after the forbearance period ends.
Eligibility for relief under the CARES Act is primarily for homeowners with a federally backed mortgage. This includes loans backed by Fannie Mae, Freddie Mac, the FHA, the VA, or the USDA. Your loan servicer can confirm if your loan meets this criteria. To request forbearance, you must contact your servicer and affirm that you are experiencing a financial hardship due to the coronavirus pandemic.
| Action Step | Key Details |
|---|---|
| Contact Your Servicer | This is the first and most important step. Have your loan number ready. |
| Confirm Loan Type | Ask if your mortgage is federally backed to understand your options. |
| Affirm Hardship | Clearly state that your financial difficulty is related to the COVID-19 emergency. |
The CARES Act initially instituted a foreclosure moratorium for properties with federally backed mortgages. This protection has been extended, prohibiting lenders and servicers from initiating or finalizing a foreclosure through December 31, 2020. This provides a critical safety net, ensuring that homeowners who are actively seeking assistance cannot lose their homes during this period. If your property is secured by a federally backed mortgage, you are protected from foreclosure under this federal law.
A significant benefit of formal forbearance is credit protection. The law stipulates that if you have an agreed-upon forbearance or modified payment plan in place, your lender cannot report your payments as late or missed to the credit bureaus. This protection was initially set through July 25, 2020, but is extended until 120 days after the national COVID-19 emergency period is officially declared over. This credit reporting safeguard is only available if you have a formal agreement with your servicer, underscoring the importance of proactive communication.
Even if your loan is not backed by a federal agency, you are not without options. Many private lenders and servicers have created their own hardship programs. Contact your loan servicer to inquire about any available forbearance options or other payment arrangements. While the terms may differ from the CARES Act, many institutions are offering flexibility to homeowners in need.
The most actionable advice is to contact your mortgage servicer as soon as you anticipate difficulty making a payment. Be prepared to discuss your financial situation and ask specific questions about forbearance, foreclosure moratoriums, and credit reporting policies. Based on our experience assessment, taking swift, documented action provides the strongest protection for your home and financial health. For the most current information, consult resources like the Consumer Financial Protection Bureau (CFPB).
