Avoiding Foreclosure During The COVID-19 Pandemic

Avoiding Foreclosure During The COVID-19 Pandemic Crisis

Gustan Cho Associates are mortgage brokers licensed in 48 states

BREAKING NEWS: Avoiding Foreclosure During The COVID-19 Pandemic Crisis

How to avoid exclusion during the COVID-19 pandemic crisis

Avoiding Foreclosure During The COVID-19 Pandemic Crisis for unemployed homeowners

  • The CARES Act is a large and important piece of legislation
  • The CARES Act was introduced to help the American people combat the COVID-19 coronavirus financially
  • The CARES Act of 2020 was the most expensive relief package ever in the history of our country
  • In this blog, we will detail a few aspects of the CARES Act
  • We will cover how the CARES Act protects Americans from foreclosure
  • This foreclosure provision applies to “federally-backed” loans. Federally backed loans include conventional mortgages secured by Fannie Mae and Freddie Mac, FHA, VA, or USDA mortgage loans
  • This makes up about 66% of the mortgages in the United States

In this breaking news article, we will discuss and cover Avoiding Foreclosure During The COVID-19 Pandemic Crisis.

Homeowners Options In Avoiding Foreclosure During The COVID-19 Pandemic

The term foreclosure is the legal process in which you lose ownership of your property.

  • The lender will take control of your property well evicting the homeowners and then sell the property
  • During the sale, the homeowner is unable to pay off the full principal balance of their mortgage as stipulated on the mortgage note
  • This legal process is based on the deed of trust contract or mortgage note that gives the lender the right to use the property as collateral when the buyer is unable to fill their repayment obligations
  • This is a very ugly term when related to mortgage lending
  • Typically, a foreclosure starts when you miss four payments in a row (sometimes less)

After you are deemed 120 days late, you then enter into a foreclosure proceeding. Meaning your lender now owns the property due to lack of payment. This process can be incredibly difficult for an individual or family.

Failure In Making Mortgage Payment Due To Unemployment

As soon as you fail to make an on-time mortgage payment, you are considered delinquent.

  • The home will then go into default. If you do not catch up on your payments within a specific amount of time, you will then start the true foreclosure process
  • The foreclosure process is different in each state, so you may want to contact a real estate attorney for specific information
  • In 22 states including Illinois and Florida, the process must go through the courts to get permission to foreclose
  • The lender must document the borrower is delinquent
  • After the foreclosure is approved by the courts, a local sheriff auctions the property to the highest bidder
  • They do this in order to recoup as much of the principal balance for the bank as possible

You would think this is a fast process however it is not. An average foreclosed home stays on the market for 1 to 2 years before it is sold.

Trump’s Stimulus Package Help Avoiding Foreclosure During The COVID-19 Pandemic

In the other 28 states including California and Texas, the process does not require the courts.

  • This can help speed the process up and the homes will not sit as long
  • But even without the courts, this process can take a long time
  • If you feel you were on the verge of a foreclosure, it is important to contact your mortgage servicer
  • They may enter you into a mortgage modification
  • For more information on modifying your current mortgage loan, please read this blog on MODIFICATIONS DURING COVID-19

Please also understand Gustan Cho Associates do not offer any services related to mortgage modifications. You will need to contact your server directly or a real estate attorney.

Alternatives To Foreclosure

There are some very harsh consequences for a borrower if they do foreclose on a property.

  • There will be a mandatory waiting period before you may enter into a new mortgage
  • The waiting periods are calculated off the date the county records the change of ownership
  • Not the day you actually move out
  • This is very important
  • For a VA loan, there is a two-year waiting period, FHA there is a three-year waiting period, and conventional, there is a seven-year waiting period

For more information on derogatory credit events and waiting periods, please call Mike Gracz at 630-659-7644 or email mgracz@gustancho.com.

Avoiding Foreclosure During The COVID-19 Pandemic With The CARES ACT

Under the CARES Act, a MORTGAGE SERVICER of a federally-backed mortgage loan may NOT:

  • Initiate any foreclosure process
  • Judicial or nonjudicial
  • Proceed for a foreclosure judgment
  • Order the sale of a home
  • Execute a foreclosure eviction or sale

These rules are in effect until AT LEAST Sunday, May 17th, 2020 and are NOT limited to borrowers with
a COVID-19 related hardship.

How To Qualify For Forbearance Under The CARES ACT

How To Qualify For Forbearance Under The CARES ACT

According to the CARES Act, ANY homeowner with a federally backed mortgage loan who has been affected by COVID-19 coronavirus can obtain forbearance from mortgage payments for up to 180 days (six months). After the initial 180 days, a borrower can request an additional 180 days of forbearance. During a forbearance period, a borrower may not accrue fees, penalties, and interest may not accrue in larger amounts than originally scheduled on the mortgage note during forbearance. These rules appear to be during the emergency or until December 31st, 2020, whichever comes first, according to the legislature.

Purchasing A Foreclosed Home During The Coronavirus Pandemic

Buying a foreclosed home during the COVID-19 coronavirus outbreak:

  • Buying a foreclosed property can be a good investment at times
  • Typically, you get a lower than market value price when buying a foreclosed property
  • Keep in mind, many foreclosed properties need some work before moving in
  • You want to make sure the home will pass an appraisal, or you will need to use a rehabilitation loan to buy a foreclosed property
  • For a list of REO (real estate owned properties), please check out this HUD REO website

This database will provide you with 1 to 4 unit Residential Properties that are currently owned by the U.S. Department of Housing and Urban Development.

Chaos In The Mortgage Industry Due To Pandemic

We are all feeling the effects of the COVID-19 coronavirus outbreak.

  • The mortgage industry has seen some dramatic changes over the past few months
  • We all hope and pray this is over sooner than later
  • As we start to see individual states relax their restrictions, we hope to see an uptick in mortgage applications
  • This can be a great opportunity to buy a home while the market is down
  • Interest rates are still all over the place but remain historically low
  • The values of homes have seen a slight dip Nationwide due to the outbreak

If you are deemed an essential worker and are still working, this can be a great time to buy a
home.

Qualifying For A Mortgage With A Lender With No Overlays During The Coronavirus Pandemic

How to qualify for a mortgage lender without overlays during a coronavirus pandemic

Gustan Cho Associates are experts in mortgage lending without LENDER OVERLAYS. Most banks
and lenders have additional guidelines to fit their individual criteria. We go only off agency guidelines,
nothing additional. This allows us to help more borrowers than many lending institutions. Over 75% of our
clients have been turned down by their current lender and are looking for other options. Please give us a
phone call today, we will discuss your mortgage qualifications in detail. For any mortgage-related
questions, please call Mike Gracz on 630-659-7644. You may also email mgracz@gustancho.com.

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