THE dangerous coronavirus has brought the economy to a screeching halt. With no work and no paychecks, millions of homeowners are now wondering how they’re going to be able to keep their homes. It’s beginning to feel like 2008 all over again.
If there’s any comfort in all this madness, everyone is in the same boat. For this reason, the government has quickly stepped in to impose a 60-day suspension of all foreclosures and evictions if you have an FHA loan. Loans backed by Fannie Mae and Freddie Mac will also get the same treatment and may be further extended as the government finds necessary while monitoring the current crisis. To find out if your loan is backed by Fannie or Freddie, you can go to their website to look it up.
The protection has been extended to California homeowners with an existing foreclosure or eviction for at least 60 days. The governor may also extend that at any time. The important thing to know is that if your mortgage payments are suspended, this doesn’t mean that you get to live in your house for free for all the months that you are skipping the payments. At some point, you will have to make up these missed payments through a repayment plan or maybe apply for modification to restructure your loan. This is all new and anything can change at any time.
If you remember back in 2008 when we had the last recession, the government came up with the HAMP Program (Making Home Affordable) under the Obama administration and laws were passed to help struggling homeowners keep their homes. I can only hope that the government will do the same thing this time and come up with an even better program.
In California, while no court order is needed to foreclose on your home, it will still take approximately four months for the lender to sell your property once they initiate foreclosure proceedings. And since everyone is on lockdown at the moment, this may even take longer. But this doesn’t mean that you can just stop paying your mortgage payments without communicating with your lender.
The best thing for you to do right now is to call them and then follow up with a letter reiterating the details of your phone conversation. Send your letter via USPS Priority Mail with keep a copy of the letter and proof of mailing as you may need these later on.
If you are calling your lender for assistance, be prepared to provide evidence that your inability to make the mortgage payments is due to the coronavirus. In other words, the bank is not just going to help you just because you asked for it unless you can prove financial hardship.
If there was ever a time to be proactive in dealing with your debts, this is the time. This is a scary time for everyone, and it is easy to be overwhelmed with anxiety and worries about your finances and how you would be able to meet even your family’s basic needs. While creditors have legal remedies to sue, obtain judgments, garnish wages, repossess and foreclose, all these may take time but it doesn’t mean that you don’t need to act quickly to avoid the ugly legal consequences that may be waiting for you down the road if things get worse.
Prioritize food and medicine expenses while also planning how to deal with debts that must be paid in order to avoid losing property that you own (example: car, home or other real property. While you may not be working at the moment (which could mean that creditors will not be in a hurry to sue if they can’t garnish wages), they will be able to do so once you start getting a paycheck again. So, the time to plan is now, not later, if you believe that your income or assets may be later at risk.
NOTE: Due to the current lockdown order caused by COVID-19, I am offering free phone consultations to anyone who needs help in dealing with their debt problems.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.