Could You Lose Your Home Due to the Coronavirus Pandemic?
The coronavirus pandemic continues to rage across the United States. Compared to other places, South Florida has not had as many positive tests for the virus. However, we anticipate that many more are on the horizon. This virus seems relatively easy to transmit. In fact, some researchers believe that those with the novel coronavirus transmit it to more than two people on average.
In response to the pandemic, many businesses have shuttered. Some city governments are also issuing lockdown orders, which have closed many nonessential businesses. Thus far, Governor DeSantis has not issued a statewide order—but he could.
If you aren’t sitting on a large emergency fund, the next couple months could be rocky, especially if your employer cuts back on hours or closes indefinitely. Could you lose your home if you can’t make your rent payment? And what should you do if you feel financially strapped?
Good News for Many: Foreclosure Moratorium
On March 18, 2020, the Federal Housing Administration (FHA) announced that they are issuing a 60-day moratorium on evictions and foreclosures for single-family homes with the mortgages they insure. The Department of Veterans Affairs has also recommended a 60-day moratorium for VA-backed loans.
If you don’t have a government-backed mortgage, your mortgage company could still have issued its own moratorium. For example, Wells Fargo has announced that it has temporarily suspended foreclosure sales on residential properties.
Forbearance & Other Options for Government-Backed Loans
Both Fannie Mae and Freddie Mac have announced that they are offering mortgage forbearance for 12 months due to the coronavirus pandemic. With a forbearance, a borrower and lender agree to temporarily reduce payments or suspend them altogether. Once the forbearance period is over, the borrower must catch up on the missed payments.
If you don’t have a government-backed mortgage, your servicer still might grant forbearance due to the pandemic. Be sure to be prepared to discuss your financial situation in detail and call your mortgage servicer or lender as soon as possible.
Take Stock of Your Finances
It might be possible to cut out some expenses, which will free up money to contribute to your mortgage. In particular, now is a great time to go through and create a budget. Look at discretionary spending and try to pare back on it. All money should go to your mortgage.
Consider Bankruptcy to Clear Debts
You might have medical debt or credit card debt that is very expensive to service. If you could wipe it out, that might free up some money each month to go to your mortgage payment.
You can’t wipe out a mortgage in bankruptcy. However, your home is protected from being seized by the bankruptcy trustee if you file for Chapter 7 (in most cases). You might also choose a Chapter 13 if you have past-due mortgage payments that you need to catch up. You can spread them out over your payment plan, which makes it easier to finally get back on track.
Call One of our Foreclosure Lawyers Today
At Nowack & Olson, we will gladly discuss your options, such as whether you should seek mortgage forbearance, file for bankruptcy, or choose another route. Please contact our Plantation bankruptcy attorneys today to get started. Our consultations are free and confidential.