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Gephardt: Mortgage relief options available, but you have to ask for them


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SALT LAKE CITY — With about 175,000 Utahns filing for unemployment since March 15, the COVID-19 pandemic has left many struggling to pay their mortgages. Many lenders are offering programs to keep homeowners in their homes but there is a key step many have not taken yet — contacting their mortgage companies.

“The worst thing to do is run the other way; to kind of ignore this and hope it goes away. That’s not going to happen,” said Greg McBride, chief financial analyst for

In a new Bankrate survey, three out of five borrowers for both home and auto loans had not reached out to their lenders.

“We saw a lot of reasons,” McBride said. “People saying that they didn’t know this was an option, they were waiting for the lender to contact them or they just hadn’t gotten around to it.”

About seven in 10 mortgages are federally backed, i.e. Fannie Mac, Freddie Mac, FHA, VA and USDA, so most homeowners can get help if they have been hit hard by the pandemic.

“You’re actually going to have actually suffered a financial impact via reduction in hours, or an outright job loss or furlough before you’re eligible for some of these payment relief measures,” McBride said.

One measure is what is called forbearance, where you can put your mortgage on hold for up to six months, under the CARES Act. But it’s not forgiveness — those missed payments don’t go away.

Say your mortgage is $1,200 per month and your payments get deferred for six months. When the forbearance ends, you are still on the hook for that $7,200.

You can pay that back by paying extra each month until you’re caught up. Another option is to tack on those missed payments to the end of the loan. Or, you can make one huge lump sum payment.

That last one caused a lot of panic early on because some lenders told their borrowers the lump sum was the only option.

“One of the common misperceptions is that you have to make those payments up in one fell swoop with a big lump sum payment later,” McBride said. “The Federal Housing Finance Authority actually issued a statement to clarify that is not the case.”

While COVID-19 forbearance programs cannot hurt your credit score under the CARES Act, they can keep you from refinancing.

“If you can make your payments, you should continue to do so,” advised McBride.

Another possible option: a loan modification that lengthens the loan or lowers your interest, so you’ll have a lower, more sustainable monthly payment.

If you don’t have a federally backed mortgage, you still might have relief options through your mortgage loan servicer, if you contact them.

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Matt Gephardt
    Sloan Schrage


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