The statewide shutdown in response to the COVID-19 pandemic has crippled the economy and left thousands of Marylanders jobless. In the early stages of the pandemic shutdown, stimulus payments and expanded unemployment benefits enable many unemployed homeowners in Maryland to stay afloat financially. But as the economic sheltering continues more and more Marylanders are starting to run out of money and wondering how they are going to make their house payments.
Fortunately, both the federal government and the State of Maryland have enacted new laws and regulations to help struggling homeowners. This page will summarize all the current rules and programs that you need to know about it you are unable to make your house payments anymore.
Mortgage Relief and Foreclosure Protection for Federally Backed Loans
In response to the economic damage caused by the coronavirus shutdown, the federal government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides 2 protections for struggling homeowners: (i) pandemic forbearance; and (ii) foreclosure freeze.
The CARES act requires federally backed loans to offer special pandemic forbearance arrangements to borrowers experiencing a financial hardship due to the COVID-19 pandemic. A mortgage forbearance is an arrangement where the mortgage lender agrees to reduce or suspend a borrower’s monthly mortgage payments for a short time. The missed payments are added to the arrears balance on the loan and when the borrower resumes monthly payments they have to pay an additional amount until the arrears is paid off.
In a normal forbearance arrangement, a default is reported to the credit bureaus and the lender charges late fees and interest on the arrears balance for the missed monthly payments. If you qualify for a CARES Act forbearance agreement, however, there will be no late fees, penalties or additional interest and no default will be reported to the credit bureaus. Anyone suffering a financial hardship related to the pandemic can qualify for a 6-month forbearance, with the option for another 6-month extension. Unlike regular forbearance agreements (or loan modifications), there is little or no documentation required.
The CARES Act also sought to help struggling homeowners by putting a freeze on foreclosures for all federally backed mortgage loans. Under the CARES Act, lenders and loan servicers (for federally backed loans) are prohibited from initiating any foreclosure proceedings through at least August 31, 2020 – and that may be extended again in the next few days.
Do You Have a Federally Backed Mortgage Loan?
To qualify for any of the protections under the CARES Act, your mortgage loan must be federally backed. Federally backed means that the mortgage is insured, guaranteed, owned, or otherwise backed or funded by one of the federal agencies or Fannie Mae or Freddie Mac. Approximately 75% of all mortgage loans in the United States are federally backed, so there is good chance your mortgage loan is eligible. Use the links below to help find out if your mortgage loan is federally backed:
|FANNIE MAE||Check here to see if your loan is backed by Fannie Mae
|FREDDIE MAC||Check here to see if your loan is backed by Freddie Mac
|FHA LOANS||All FHA mortgage loans are “federally backed” loans that are eligible for CARES Act protections.
|USDA LOANS||All USDA mortgage loans are “federally backed” loans that are eligible for CARES Act protections.
|VA LOANS||All VA mortgage loans are “federally backed” loans that are eligible for CARES Act protections.
If your mortgage loan is not a federally backed loan, then it is not covered by the CARES Act protections. You will need to contact your lender or loan servicer directly to find out if they have any private assistance programs.
New Maryland Foreclosure Laws
In the early phase of the pandemic, Maryland stayed all foreclosure actions (and evictions) in the state. That across the boar stay on foreclosures and evictions was lifted on July 25, 2020. However, the foreclosure freeze for federally backed loans under the CARES Act is still in place. Therefore, in order to initiate a new foreclosure action in the Maryland courts, the lender attempting to foreclose is now required to file a Declaration of Exemption from Moratorium (see Admin. Order COA). The declaration basically confirms that the mortgage being foreclosed is not a federally backed loan and is not subject to the CARES Act foreclosure freeze.