Mortgage Relief Options: What Minnesotans Should Know

TWIN CITIES, MN — As the coronavirus crisis causes unemployment to skyrocket in Minnesota and elsewhere, more homeowners are be seeking mortgage reliefMinnesota Commerce Commissioner Steve Kelley has released new information on the options available, including delayed and reduced monthly payment options, for homeowners with federally backed loans seeking to obtain mortgage assistance.

The new information clarifies borrowers’ rights to mortgage payment forbearance and foreclosure protection, for homeowners with federally backed loans, under the federal Coronavirus Aid, Relief and Economic Security Act (CARES Act).

A borrower of a federally-backed mortgage loan who is experiencing a financial hardship due to the COVID-19 pandemic may be able to obtain a 180-day pause in paying their mortgage or temporarily lower mortgage payments.

Mortgage forbearance or mortgage relief is a temporary reduction or suspension of monthly payments and is not loan forgiveness. Borrowers still need to repay any missed or reduced payments in the future. However, while in forbearance, partial payments are acceptable and will reduce the amount owed in the future.

Under the CARES Act, there are no fees associated with obtaining forbearance, according to a news release. Consumers are warned to be wary of anyone offering help with forbearance for a fee.

Additionally, foreclosure actions are frozen until June 30, 2020 on loans federally backed by Fannie Mae, Freddie Mac and HUD, which includes single family FHA loans and reverse mortgage HECM loans.

Loan types that are federally backed include:

• Conventional loans purchased or securitized by Fannie Mae and Freddie Mac
• Federal Housing Administration (FHA), including Home Equity Conversion Mortgage (HECM)
• S. Department of Veterans Affairs (VA)
• S. Department of Agriculture (USDA), including USDA Direct and USDA Guaranteed

Privately held loans are not eligible for forbearance relief under the CARES Act, however consumers should still contact their mortgage servicer to ask about assistance programs.

If you have a question, contact the Commerce Department’s Consumer Services Center at consumer.protection@state.mn.us or (651) 539-1600 or 800-657-3602.