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Updates on COVID-19 Mortgage and Foreclosure Relief

As the COVID-19 pandemic continues, many homeowners still struggle to afford mortgage payments or are already in foreclosure. Some relief is available in the forms of temporary payment relief (“forbearance”) and other strategies. There is also an ongoing statewide “pause” on most foreclosure evictions. The information in this article generally is not available for homes that are vacant or abandoned.

This article highlights some aspects of available options, but does not cover every detail. COVID-19 mortgage assistance programs continue to change, so please visit our website for up-to-date information or contact the LSNJLAWSM hotline with questions: 1-888-LSNJ-LAW (1-888-576-5529).

Whether your mortgage is “federally backed” or “privately owned” affects your rights. Each section of this article is broken into these two categories. In general, “federally backed” mortgages are issued, guaranteed, or insured by the federal government through: the FHA (including most reverse mortgages), the USDA, the VA, Fannie Mae, or Freddie Mac. To find out if your mortgage is federally backed, you can call your servicer and ask (your servicer is the company that sends mortgage statements) or you can visit the Consumer Financial Protection Bureau website at https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/learn-about-forbearance/.

Payment relief through forbearance

A forbearance pauses payments for period of time, but it does not forgive or cancel the payments. At the end of a forbearance, usually the entire unpaid amount becomes due. If you cannot afford to pay back all the missed payments at once, then you can apply for help (known as “loss mitigation”) like a loan modification or a repayment agreement. If no agreement can be reached, then the mortgage may go into default status and a foreclosure action could later be filed.

Federally backed: If you have a federally backed mortgage and if COVID-19 affected you financially, you should qualify for a COVID-19 forbearance for up to one year. Even if you stopped making payments before March 2020, the federal CARES Act still allows you to request a COVID-19 forbearance. Most people get a forbearance for six months at first, and then can call back to request another six months. Call your servicer to request a forbearance as soon as possible. Deadline: For FHA and USDA mortgages, your first forbearance must be requested by March 31, 2021. For other federally backed mortgages, there is no specific deadline.

Privately owned: If your mortgage is not federally backed, it is “privately owned.” In March 2020, the New Jersey Department of Banking and Insurance (DOBI) reached agreements with most banking institutions to provide 90-day forbearances for privately owned mortgages. Although DOBI has not announced any extensions of this program, you should contact your servicer and request a forbearance if you are struggling to afford mortgage payments.

Options after forbearance relief ends

Federally backed: Servicers should contact borrowers within 30 days of the end of the forbearance to discuss loss mitigation options (loan modification, repayment plan, or similar workouts). Regardless of the date of the last missed payment, loss mitigation options must be reviewed for anyone in a COVID-19 forbearance. Borrowers who defaulted around or after March 1, 2020, have more loss mitigation options available to them than borrowers who defaulted before COVID-19.

Privately owned: There are currently no required loss mitigation options for privately owned loans. Although there are no mandatory programs, many privately owned loans offer loss mitigation options to borrowers. If you have a privately owned mortgage and cannot afford payments, you should contact your servicer to ask for available options.

Sheriff’s sales and foreclosure moratoriums

Sheriff’s sales are the stage of a court foreclosure when the county sheriff auctions properties that have gone through a final judgment of foreclosure. All counties in New Jersey have paused sheriff’s sales since March 2020 for all loans, whether federally backed or privately owned. You can contact your county sheriff’s office if you have questions.

Under New Jersey Executive Order No. 106, almost all foreclosure evictions are paused until at least two months (60 days) after the COVID-19 Public Health Emergency ends.

Foreclosure moratoriums are “pauses” on the court foreclosure process.

Federally backed: All federally backed mortgages are subject to foreclosure moratoriums right now, which prevent court foreclosures from moving forward and prevent evictions if a sheriff’s sale already happened. The moratorium ends on March 31, 2021. These deadlines may be extended. If you think something was filed in court that violated the moratorium, please contact the LSNJLAWSM at 1-888-LSNJ-LAW (1-888-576-5529). You should also file a complaint with the Consumer Financial Protection Bureau (CFPB) at 855-411-2372 or www.cfpb.gov/complaint.

Privately owned: Evictions are paused during the Public Health Emergency due to Executive Order 106. However, these lenders can still file foreclosures in court.

New Jersey Courts and Electronic Filing

In 2020, an electronic filing system was created for unrepresented people to use for online filing. The system is called Judiciary Electronic Document Submission (JEDS). To learn more about JEDS, including how to create an account and instructions on how to file, please visit: https://njcourts.gov/selfhelp/jeds.html.

In general, court proceedings are being conducted remotely from home, and this may include phone or video hearings. If you have an upcoming court date, but do not have reliable phone or internet access, you should tell the court as soon as possible and request reasonable accommodations. If you encounter any problems, contact your county court ombudsman—a list is available here (https://njcourts.gov/public/ombudsdir.html?lang=eng)—or call 2-1-1. ​​

5/12/2021