How to access mortgage and school loan relief during the COVID-19 emergency
Since late March 2020, a stay-at-home “advisory” in Massachusetts and a stay-at-home “order” in Rhode Island have kept non-essential businesses and schools closed, and people adhering to strict social distancing protocols. The objective of these requirements has been, of course, to help stem the further spread of COVID-19 in both states.
As we enter into a second month of limited-to-no work, school, or socializing, the team at HIG recognizes that many people throughout the South Coast of MA and RI may be experiencing varying levels of financial hardship. And, as this emergency and its related requirements persist, it could certainly get even tougher for individuals and families to pay their bills, make loan payments, and meet other important financial obligations.
During this uniquely challenging and confusing time, HIG is doing our best to share as much straightforward and helpful information as we can with the people and communities we serve. Today, we would like to dive into some of the financial support for individuals and families that is included in the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act.
This historic $2 trillion package includes two programs that are specifically designed to offset some of the money-related stress that homeowners and student loan holders may be feeling:
Program #1: Federally-held student loan repayments have been suspended.
With the passing of the CARES Act, Congress has suspended payments on all federally-held student loans through September 30, 2020. Interest will not accrue on your loans during this time. You can still make payments if you wish to; otherwise, you do not have to take any action as your loans have been automatically suspended without you having to lift a finger or pay any fee. In fact, if you do receive a call from anyone asking you to pay a fee to suspend your loan payments, this is a scam that should be reported to the local police and the Federal Trade Commission.
It is important to know that some loans are not included in this program, such as:
- Institutionally-held Perkins loans
- Commercially-held Federal Family Education loans
- Private loans
By contacting your student loan servicer, you will be able to confirm what types of loans you hold and whether they qualify for deferment for the next few months.
Whether or not you qualify for COVID-19 interest waiver and payment suspension, you may want to consider applying for an income-driven repayment plan through the U.S. Department of Education. This program was set up to assist people whose student loan payments are high compared to their actual income. If your income is low enough, your payment could be as low as $0 per month.
Another excellent resource for struggling student loan borrowers is the Attorney General’s Student Loan Assistance Unit; they can help you explore repayment options, including temporarily stopping your student loan payments.
Finally, under the CARES Act, there is also protection for people who have defaulted on their loans or who are currently enrolled in rehabilitation plans. Through September 30, 2020, wage garnishment, social security benefit offset, and federal tax refund seizures will cease on defaulted federal student loans, and payments are suspended for borrowers in a rehabilitation plan.
Program #2: Government-backed mortgage payments may be put on hold for 180 days or more.
The CARES Act offers several mortgage relief options for homeowners who have a federally-backed mortgage. The most common government-backed programs today include:
- U.S. Department of Housing and Urban Development
- Federal Housing Administration (FHA)
- U.S. Department of Veterans Affairs (VA)
- U.S. Department of Agriculture (USDA)
- Fannie Mae
- Freddie Mac
If you are a homeowner with a mortgage from one of these loan servicers, and you are experiencing financial hardship due to the coronavirus pandemic, you have the right to request forbearance – a pause or reduction in your mortgage payments – for up to 180 days. After the 180 days have passed, if you still need mortgage assistance, then you can request an extension of another 180 days. There will be no additional fees, penalties, or interest (beyond scheduled amounts) added to your account.
The CARES Act also prohibits these federally-backed lenders and servicers from beginning a judicial or non-judicial foreclosure, or from finalizing a foreclosure judgment or sale, during the 60-day period between March 18, 2020 and May 18, 2020.
Before you take advantage of this provision, however, it’s important to carefully assess your situation. If you can afford to pay your mortgage, consumer finance experts recommend you continue doing so. However, if you are unable to make your monthly payments, or can only afford to pay a portion of what you owe, then contact your mortgage servicer immediately.
If you do not have a federally-backed home mortgage or student loan, but you need financial relief due to the impact of COVID-19, financial regulators from both the federal and state government recommend that you contact your servicer right away.
Lending institutions have been strongly encouraged to work closely with borrowers who are currently, or may be in the future, unable to meet their payment obligations. Based on your specific circumstances, your lender may be willing to provide forbearance for a limited period of time, a loan extension, a reduction in interest rates, and/or flexible repayment options.
HIG will continue to be here to support you
Beyond a mortgage and student loans, the HIG team understands that you have other financial obligations. One of them being your insurance premiums. Many of the providers that we work with are implementing one or more of the following new guidelines to ease the financial challenges you may be having during this pandemic:
- A 30-day grace period on payments that are due
- Waiving late fees for all policies
- Not charging a fee for payments made over the phone with a customer service representative
- Low mileage discounts
You might also want to explore using our client portal, called HIG 24/7 Client Access, which allows you access to your account information any time you need it, even after normal business hours. Simply contact us for help signing up.
Most importantly, we want you to know that the HIG team is available and ready to serve you, whether over the phone or online, throughout this COVID-19 emergency. For more than 100 years, we have been committed to the safety and well-being of the individuals, families, business owners, and communities we serve. During this very unusual time, we will continue to do whatever it takes to keep our clients informed, healthy, and happy. We hope you will put our experience to work for you.