What you need to know about mortgage forbearance and the eviction moratorium

Last updated: June 30, 2021

On March 27, 2020, the CARES Act was signed into law putting into place a forbearance on federally backed mortgages through the end of the year. Later in 2020, the Centers for Disease Control (CDC) issued an order to stop renters’ evictions, also through the end of the year. Both have since been extended, but only until July 31, 2021, and even though they prevent evictions and foreclosures, neither relieves the obligation for payment. Consequently, there is an estimated 13 million renters and homeowners who face the possibility of being removed from their current residence. If you are one of them, here is what you need to know:

If You Rent

According to the Census Bureau, 6 million renters are still behind on their rent payments. The Consolidated Appropriations Act of 2021 and the American Rescue Plan Act provide federal funds directly to states and municipalities to help tenants with back rent, utilities, and other housing related expenses, but the process is slow and may not be in place for all tenants in time to help by the July 31st deadline.

If you don’t take action now, starting August 1st landlords will be able to evict those who are behind on rent and sue for the money owed, even if the non-payment is for COVID related reasons. Several states have their own restriction on these evictions and offer programs to help, but unless your state is one of them, you may still be at risk.

If You Have a Mortgage

The Census Bureau estimates that nearly 7 million homeowners are still behind on their mortgage. Borrowers have until July 31st to apply for forbearance on a federally backed home loan, although loans with Fannie Mae or Freddie Mac do not have a deadline to apply for an initial forbearance. Mortgage holders may not foreclose until July 31, 2021. If no forbearance is granted, these mortgages may be moved to foreclosure starting August 1, 2021.

If You Are at Risk

If you are behind on payments and your financial situation is temporary, reach out to your landlord or lender as soon as possible to see if they will work with you on some kind of payment agreement. If they are unwilling to work with you, or your financial situation is more permanent, you may need more help.

The Homeownership Preservation Foundation offers homeowners and renters access to certified housing experts who will work with you to develop a plan tailored to your unique situation. If your employer provides financial coaching, you will want to take advantage of that as well.

Be sure to check with federal, state, and local agencies to find out if they offer rent and utility assistance. If you are behind on your mortgage, you should request mortgage forbearance right away.

If You Receive a Notice of Eviction or Foreclosure

If your landlord or lender begins the process of removing you from your residence, don’t panic. Check with your local housing authority to see if there are protections and programs in place to help you. In some cases, you may want to seek legal help, so check with your employer to see if they offer access to legal services as a prepaid benefit or through an employee assistance program (EAP). You can also contact your local bar association to look for legal help at little or no cost.

As a precaution, you should get in touch with the shelter system in your community to ensure you will have a place to live in the event you are evicted or foreclosed. Hopefully it won’t come to that, but if necessary, look for temporary housing nonprofits and charities in your area.

Additional resources:

U.S. Department of Housing and Urban Development (HUD.gov)

Help for renters: Coronavirus housing resources (consumerfinance.gov)

What Is Foreclosure and How Can I Avoid It?

COVID-19 Relief for Rent & Mortgage Payments

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