COVID-19 brought a lot of changes to the world, and most of them are negative. To help offset the financial effects of the pandemic, the U.S. government placed a moratorium on foreclosures, which ended July 31. However, there is still protection for foreclosure-related evictions through September 30, 2021, which is quickly approaching. Here’s what you need to know about foreclosures after COVID.
When can your mortgage company foreclose on your home?
If you’re behind on payments, your mortgage company may start the foreclosure process now. However, there are a few things to know.
First, you can still apply for relief. Under the CARES Act, borrowers may request a forbearance, which allows you to stop making payments for up to 18 months. This law only applies to loans that are government-issued or backed, but most private lenders are also providing assistance.
What can you do to avoid foreclosure?
If you’re trying to avoid foreclosure after COVID, there are options available.
First, you can take advantage of the forbearance period provided by the CARES Act. Contact your mortgage company to apply. You’ll have up to 18 months of mortgage relief, giving you time to recover financially and catch up on payments.
If your forbearance ends and your financial situation hasn’t improved, your mortgage company may be legally required to send notification of other payment options. In most cases, the mortgage company can’t start foreclosure proceedings until January 1, 2022.
In the meantime, you can catch up on your missing payments by creating a payment plan with the mortgage servicer, paying the past due amount in one lump sum, deferring your payments (moving the missed payments to the end of the loan and resuming your normal payment amount), or modifying your loan to obtain a lower payment.
If these options aren’t feasible, you may also sell your home. It’s currently a seller’s market, so you may have significant equity in your home, even if you’re behind on payments.
If you don’t have equity or want to remain in your home, bankruptcy may be an alternative option. Bankruptcy creates an automatic stay which ensures you won’t face foreclosure until the bankruptcy is complete. This option may provide financial relief that allows you to keep your home and resume payments.
Whichever option you choose, it’s important to contact your mortgage provider. Lack of communication often speeds up the foreclosure process. If you explain your situation and ask for assistance, your mortgage company may choose to help rather than foreclose. In fact, they may be legally required to help, depending on your circumstances.
Finding an Attorney to Assist With Foreclosure
Whatever your current situation, help is available, but you must act quickly. While you won’t face eviction during the moratorium, deadlines are looming, and it’s important to get ahead of the situation now.
If you have questions or need help to avoid foreclosure, you can contact Mellor Law Firm with any concerns.