The CARES Act, signed into law on March 27, was implemented to assist qualified citizens who were being economically impacted by the COVID-19 pandemic. Some of the measures were designed to help those who had government-backed mortgages avoid foreclosure during this time.
How Can the CARES Act Help You?
If you’re experiencing any financial hardship during our current pandemic, the CARES Act is designed to help you if you are temporarily unable to make your VA loan payments. Under this act, you can request a forbearance period. This will be between you and your mortgage servicer and it is not necessary to contact the VA directly. But the VA loan rules that, for COVID-19 relief, when the borrower makes a forbearance request, the servicer must grant it with no additional documentation required.
What is Forbearance?
Forbearance is an agreement between you and your servicer that agrees to allow you to either delay or partially pay mortgage payments. Under the CARES Act, you have the right to
- Request mortgage forbearance of up to 180 days without paying penalties if you have been financially impacted by the continuing COVID-19 emergency.
- You can extend this for up to another 180 days before the initial time limit ends.
- Under the CARES Act, your servicer cannot report any delinquencies during this time period and 120 days afterward and it will not affect your credit score in any way.
You Are Still Responsible for Payment
Under this forbearance, any of these delayed payments are still owed to your servicer. It will be between you and them to decide the terms of how you wish to repay this.
The repayment agreement can take different courses depending on your servicer. You may agree to make the payments all at once after your forbearance period if you are financially able to do this. You may agree to spread this balance over an agreed upon time. Your servicer may even agree to take the amount of your forbearance and add it to the balance of your mortgage.
This is between you and your servicer and requires honesty about your income and any savings and expenses you may have. Your servicer must try to help you find a financially reasonable way to pay the deferred amount and must offer you options to do so in addition to paying the balance all at once.
VA Mortgage Modification
If you have agreed to make up the balance of your deferred mortgage payments in higher monthly payments and then realize that you can’t afford to do so, the VA allows you to take advantage of loan modifications. You may be able to extend your loan up to 480 months from its original due date, thereby extending the 30-year term up to a 40-year one, depending on your need.
Contact Your Servicer
If you are experiencing any financial hardships that have been caused directly or indirectly by the COVID-19 emergency, immediately contact your loan servicer to discuss your forbearance options under the CARES Act. You may also visit the VA CARES Act webpage to get more information.
Front Range Mortgage for VA Loans in Denver
At Front Range Mortgage, we provide Colorado with the best information about the mortgage industry and mortgage products. If you are in the market for a home or refinance in Colorado, we can help. As licensed mortgage brokers in Colorado doing business in Colorado Springs as well as Denver, Grand Junction and throughout the state, we would be happy to find the mortgage that fits your needs best.
Call us at (303) 500-1900 in Denver and (719) 540-2020 in Colorado Springs for a no-cost prequalification.