The Help Offered Depends on the Lender Involved
Different lenders have different loss mitigation guidelines. Fortunately, just a few entities own, insure, or guarantee almost all residential mortgage loans in the United States: Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture’s Rural Housing Service (RHS). You must identify who owns or insures your mortgage in order to know your options for modifying your mortgage payments. To determine who owns your loan, use these tips:
- ● Fannie Mae: Go to www.knowyouroptions.com/loanlookup.
- ● Freddie Mac: Go to https://ww3.freddiemac.com/loanlookup.
- ● FHA: Because some lenders use FHA forms for all their mortgages, do not assume you have an FHA mortgage just because your loan documents say FHA or HUD. Look at your monthly statements for an itemized charge for FHA insurance or “MIP.” Or look for a box checked off “FHA insured” on your settlement statement. You can also ask HUD’s National Servicing Center at 877-622-8525.
- ● VA-insured: Loans and billing statements identify VA insurance. A mortgage document will say “THIS LOAN IS NOT ASSUMABLE WITHOUT THE APPROVAL OF THE DEPARTMENT OF VETERANS AFFAIRS OR ITS AUTHORIZED AGENT.”
- ● RHS guaranteed loan: Closing documents will reference to RHS insurance coverage. Older loans may refer to FmHA insurance or guarantees.
- ● RHS direct loans: Closing documents should mention the “Section 502 Single-Family Housing Program” and the loan will be serviced by a national servicing center in St. Louis identifying itself as a servicer of RHS direct loans.
- ● For all loans: Send a request for information letter to your servicer (see Chapter 16).
In some situations, someone other than the above entities will own your mortgage loan, and then it may be more difficult to learn your loss mitigation options. Try asking for options similar to those available for Fannie Mae and Freddie Mac loans, since these set the industry standard.
If you faced a financial hardship because of the COVID-19 emergency, you should ask your servicer for help. Servicers of Fannie Mae, Freddie Mac, FHA, VA, and RHS (or “federally backed”) loans all have options available to assist borrowers with COVID-19 hardships, and some other loan types do too.
To access help, contact your servicer and ask for a “forbearance,” which provides a temporary period of time when you do not have to make your mortgage payments. You will have to pay these missed payments back, however.
Once you are ready to make payments after a COVID-19 hardship, ask your loan servicer what options are available to repay your missed payments. The servicers for Fannie Mae, Freddie Mac, FHA, VA, and RHS (or “federally backed”) loans all have options other than a large lump sum to help you become current. If you do not have a “federally backed loan” or your loan is otherwise ineligible for a COVID relief plan, your options may be limited and you should know that up front. Importantly, the rules for borrowers with COVID-19 hardships change a lot. You can visit www.nclc.org/survivingdebt to see updates.