Saving Your Home During and After the Pandemic
Created by FindLaw's team of legal writers and editors | Last updated April 08, 2020
The spread of the COVID-19 virus is making many people concerned about paying their rent or mortgage. It is unknown how long the pandemic will go on, so learning about saving your home early on is beneficial.
Whether you are already seeing repercussions from losing income or are nervous about the future of your home, we outline the major issues below.
Foreclosure Changes During COVID-19
Paying your mortgage may be top of mind if your job is on the line. Under normal circumstances, a home loan has terms that set how many months you can be behind on payments before foreclosure can happen. Often, this is four to six months before the lender can take action.
The Real Estate Settlement Procedures Act (RESPA) gives you time to find a solution with your mortgage company. There are also options for relief through most major mortgage companies. Often, payment plans or other deals can be worked out.
Since these are not normal circumstances, most state governments are working to slow this timeline to help residents.
Foreclosure Suspensions: Federal and State Level
Today, at the state level, many governors are temporarily banning any lenders from starting the foreclosure process. Many have to wait 90 days before bringing up foreclosure, and they must offer a deferral period.
Some perks include not charging late fees or not reporting this to credit companies. In short, it should not hurt your credit if you are facing late mortgage payments right now. The same is true with car payments and payments on mobile homes.
Government stimulus checks may also offer some assistance, though these may be a one-time offering. Your state may be handling things differently. Check your state's website for information — and remember things may change week to week.
What Might Happen After the Pandemic Is Over
Some people will face foreclosure when the pandemic ends, even with government help or adjustments from their lenders. Monthly payment plans will still be there when this is over, and people without jobs may still be struggling.
If a lender offers you a great deal, it may come with some unfortunate fine print. It is essential to know the terms of any mortgage relief deals, such as:
- Changes in interest rates
- Penalties for missing a payment
- Fees for late payments
- Timeline for payments
- Risks of still going to foreclosure
What You Can and Should Do to Help Avoid Foreclosure
Car loans, monthly bills, and home utilities can add to the stress. An attorney experienced in foreclosure and alternatives to foreclosure is one of the few people who will be on your side as companies start looking for their payments.
You can start the process by following these steps:
- Get a realistic look at your income, unemployment, job status, and other benefits or risks
- Reach out to your lender to explain your concerns
- Ask your lender to explain what mortgage payment relief options they are offering
- Read and understand your state's relief options
You may need to be able to show your job was lost due to coronavirus shutdowns or that you have the virus and cannot work. Save emails from work or COVID-19 test results. Avoiding foreclosure is the best-case scenario here. You need a professional to review your exact situation and all your options, including relief plans and unemployment options.
Cost of an Attorney During Foreclosure Fears
Using an attorney when money is already tight may seem counterproductive. But many offer flat fee rates (often $300-$700) for contract reviews.
Others could spend an hour or two on it at their hourly rate, which could range from $100-$500 per hour. You can save on attorney costs by having the facts, dates, and paperwork ready before speaking to an attorney. You can also ask to handle the back and forth with your lender to save money.
In the long run, a knowledgeable attorney can help you save money and avoid getting trapped in bad deals when avoiding foreclosure. Now is as good a time as any to reach out to a lawyer — many offer phone and video consultations.
Stay Ahead of Bad Deals and Long Term Problems
A real estate law attorney can look over the deal from your mortgage company — often for a flat fee or hourly rate.
Having a professional review the offer will help you understand the pros and cons of what you are being offered. Not all relief deals will give you real relief in the long run.
Next Steps
Contact a qualified real estate attorney to help you avoid or navigate the foreclosure process.