As the economic impacts of the coronavirus pandemic begin to hit home, many Americans are becoming worried about how they’ll make their mortgage payments, especially if they’ve been furloughed or laid off from their jobs.
The good news is mortgage lenders are quickly making accommodations. Mortgage giants Fannie Mae and Freddie Mac both have ordered lenders to be more flexible with borrowers, reducing or suspending payments for up to 12 months. That action alone covers half of the country’s home loans.
Other mortgage lenders are likely to follow suit eventually. But if your lender hasn’t set new policies yet and you’re facing an immediate mortgage crisis, there are steps you can take.
First off, and most important, don’t just stop paying your mortgage. Reach out to your lender and work with them to create a payment plan. That’s as easy as making a phone call.
Most lenders will offer a forbearance. That’s something to be cautious of, however.
A forbearance often only kicks payments down the road. So while you might be able to not pay a mortgage for several months, when that time period is over, you could be expected to pay all of the missed payments as well as the current one in a lump sum. For many people, that could be a devastating blow.
Check with your lender to see if this would be the case. Both Freddie Mac and Fannie Mae are ordering lenders to work with borrowers on a permanent plan to maintain or reduce monthly payments as necessary.
A better bet is to request a mortgage modification. This allows you to skip payments for a set period, then pay them back in a variety of different manners.
Some mortgage companies will spread the missed payments out over several months. Others, in the best-case scenario, will add the missed months to the end of your mortgage, extending the life of the loan, but not creating a financial hardship for you.
In the meantime, foreclosure sales and evictions in Freddie Mac and Fannie Mae-owned home have been halted until at least May 17. And delinquent payments will not be reported to credit bureaus.
Major mortgage lenders are handling deferment requests in different ways. The best idea is to reach out directly to your lender. Their mortgage assistance websites can also offer some basic information:
Chase – The bank says it will review your loan for options including a repayment plan, forbearance, or a loan modification.
Bank of America – The financial institution has paused foreclosure sales, evictions, and repossessions and says it is working with customers.
Wells Fargo – Customers can call 800-869-3557 to discuss their options.
TD Bank – The bank has specialists standing by at 800-222-5522.
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