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What to do if you’re struggling to pay your mortgage

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California has a program to help—but the onus is on you to take advantage of it

A yellow stucco house with a front porch, tiled roof, and three arched windows. The house is fronted by a lawn and roses.
A handful of big banks have agreed to waive mortgage payments for at least 90 days.

California Gov. Gavin Newsom provided state homeowners with a bit of welcome news last week: More than 200 banks will give Californians extra time to make mortgage payments this month.

With millions of people out of work nationwide due to the COVID-19 outbreak, many homeowners and a handful of local officials have called for even more relief—in the form of a payment freeze or mortgage forgiveness.

“We cannot let a pandemic throw millions of Americans into unmanageable debt,” Los Angeles City Councilmember David Ryu said in a statement Thursday. “Every level of government must help working people focus on what matters: Their health, their family, and putting food on the table, not bills that they can’t pay and debt that they can’t manage.”

But so far, government action has merely given both renters and homeowners a little more time to catch up on their bills.

If you’re having trouble making payments on a house you own, here’s what you need to know.

Will all homeowners in Los Angeles get extra time to make mortgage payments?

Most homeowners will probably be able to receive some form of assistance, but the details will vary. According to Newsom, four of the nation’s largest banks—Wells Fargo, JPMorgan Chase, Citi, and U.S. Bank—have agreed to waive mortgage payments for at least 90 days. All state-chartered banks have agreed to do the same.

Bank of America spokesperson Bill Haldin says the bank is also deferring mortgage payments for up to 90 days.

One of the most important things to keep in mind here is that these forbearance periods—during which payments and late fees will be suspended—are not automatic. In most cases, customers will need to call in to request a forbearance. It’s important to do that as soon as possible to avoid late fees.

Many California homeowners also have mortgages that are serviced by companies that aren’t included in the governor’s announcement. Even if you originally borrowed money from a small, state-chartered bank when buying your home, that loan may have been sold to another bank or mortgage servicer.

Fortunately, quite a few of these mortgage holders are offering some form of assistance to customers. Both Mr. Cooper and Ocwen, two of the nation’s largest mortgage servicers, have announced three-month forbearance periods for customers impacted by COVID-19.

Moreover, the Federal Housing Finance Agency last month ordered government-backed mortgage corporations Fannie Mae and Freddie Mac to give homeowners up to a year of forbearance and to suspend foreclosures for 60 days. The two companies own or back about half of all mortgages in the United States.

The Federal Housing Administration, which backs many loans for first-time buyers, has an existing forbearance program in place for homeowners experiencing a sudden loss of income.

Who do I call to request forbearance?

To request more time to pay your monthly bill, call the company that services your mortgage. This is not necessarily the lender that you borrowed from originally, so check your billing statement to make sure you are calling the right help line.

Even if the company servicing your mortgage hasn’t announced a COVID-19 relief plan, it’s worth calling to see what your options are if you are unable to make a payment.

Will missed payments have to be repaid?

Barring further government intervention, yes. Though many mortgage companies are providing homeowners with flexible repayment options, borrowers will still be on the hook for bills deferred during this time.

Will homeowners have to prove they’ve been affected by COVID-19?

This will vary from company to company. The forbearance periods are intended for those who’ve been impacted financially by the pandemic—either because they’ve gotten sick, someone in their family has been sick, or they’ve lost work due to stay-at-home orders.

Many banks are not requiring customers to prove financial hardship; they’ll take your word for it. Others may require some form of documentation—be it a pay stub, a doctor’s note, or a letter or email from an employer. Either way, it’s probably best to keep these documents handy, in case you need them at some point down the road.

Can banks foreclose on homeowners right now?

According to Newsom, the same banks that agreed to forbearance periods last week have also promised to halt foreclosures for at least two months. On top of that, federal officials last month ordered a two-month break from foreclosures for mortgages owned by Fannie Mae and Freddie Mac—as well as those backed by the FHA.

That means that many—if not most—Los Angeles homeowners will be shielded from foreclosures for the time being.