Here is how you can suspend your mortgage payments for up to a year

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If you’re one of the millions of Americans who have lost their jobs due to the coronavirus pandemic, you may need to suspend your mortgage payments temporarily. The CARES Act allows American homeowners to suspend mortgage payments for up to a year. However, some borrowers aren’t being told the entire story from their mortgage servicers.


Here’s what some banks are saying

The South Florida Sun Sentinel reports that some consumers are saying on the social media pages for some of the biggest banks in the country that they’re being told something different when they ask to suspend their mortgage payments.

Customer service representatives are reportedly informing some consumers that they can only suspend payment for three months. They also said that after those three months, the three missed payments will due as a lump sum with the payment for the next month. For the millions of Americans who have been laid off due to the coronavirus pandemic, that doesn’t really help.

President Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) toward the end of March. It grants borrowers whose loans are backed by a federal agency the right to suspend their mortgage payments for up to a year through something called forbearance. Payments are suspended without any penalties, fees, extra interest, or damage to your credit score.

Many borrowers believe their mortgage is owned by the bank or other firm they make payments to. However, the Urban Institute estimates that approximately 70% of mortgages in the U.S. are owned by an agency that’s either controlled or backed by the federal government.

These agencies include Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Housing and Urban Development, the Department of Agriculture, and the Veterans Administration.

Find out which agency owns your loan

Before you can suspend your mortgage payments for any length of time, you must find out whether any one of these agencies owns your loan. The Consumer Financial Protection Bureau offers some tools to help you figure it out.

The easiest way to find out who owns your mortgage is to call the servicer, which is the bank, credit union or other firm that you make payments to. If your mortgage is owned by Fannie Mae or Freddie Mac, you can use their online lookup tools here (for Fannie Mae) or here (for Freddie Mac). If it’s owned by any of the other federal agencies, your mortgage servicer should know.

How to suspend mortgage payments for up to a year

After you make sure your mortgage is owned by a federal agency, you can start to consider your options. The first and only step is to contact the firm that services your loan and discuss forbearance options.

Your mortgage servicer should work with you to come up with the best option for you. Many borrowers opt to take the months they miss and simply add them to the end of their mortgage term. However, that’s not the only option that’s available to those who suspend their mortgage payments. You may also be able to take the amount of the missed payments and spread them out over the rest of the loan. Depending on which agency owns your loan, the forbearance options may be slightly different, but the goal is the same. The federal government wants to avert another housing crisis in which millions of homes are foreclosed upon.

Mortgage servicers can offer forbearance for up to 90 days at a time. Before the end of each 90-day period, you must reach out to your servicer again to secure another 90 days of forbearance. You must contact your mortgage servicer to arrange forbearance. No relief will be provided to those who simply stop making payments without contacting their servicer.