The COVID-19 pandemic has created extraordinary challenges for homeowners across the country. As one of the country’s largest mortgage companies, AmeriHome strives to prepare its customers, employees, and partners to navigate this crisis using the tools available. This special edition of the AmeriHome Angle is devoted to providing you with timely information and helpful resources during this time of uncertainty.
For this edition, we interviewed Eric Varnen, AmeriHome’s Senior Vice President, Servicing Operations. [UPDATED June 2, 2020]
Q: When a borrower calls their loan servicer to indicate that they are impacted by COVID-19, what are the servicer’s responsibilities and obligations?
A: If a borrower is experiencing financial hardship as a result of COVID-19, they can rest assured we will work with them to determine the available options best suited to their needs.
With COVID-19, uncertainty about the length of time the customer’s hardship might last is very common. For this reason, when a customer’s income has been curtailed, we offer forbearance as the best place to start. A forbearance plan is a temporary suspension or reduction of the borrower’s regular mortgage payments intended to allow the time and flexibility to manage the challenges affecting a borrower’s ability to pay their mortgage.
During a forbearance, no payments are expected, late charges do not accrue, and negative credit reporting is suppressed. The purpose of a forbearance is to give borrowers a chance to catch their breath, get through the crisis, and focus on core necessities rather than paying their mortgage.
It is important to note that forbearances are not intended as permanent solutions. They are pauses to allow borrowers to get through an acute crisis and meant to address temporary hardships. The Coronavirus Aid, Relief, and Economic Security Act (CARES) provides for forbearance periods for borrowers with federally-backed mortgages who attest that they are impacted by the virus, of up to 180 days, with another extension if needed for up to an additional 180 days, for a total of 360 days.
Customers can learn more about their options or other COVID-related information on our website here.
Q: What happens at the end of a forbearance?
A: Throughout the forbearance period, we will maintain routine contact with borrowers to check their status, and then reach out about 30 days before the forbearance period is scheduled to end to determine the best plan in light of each customer’s circumstances. The latest guidance from the federal agencies who own, insure, or guarantee the loans outlines the options that will be available to customers after the forbearance period.
Q: What post-forbearance options are available?
A: Depending on who owns their loan, customers have a variety of options to repay the loan amount accumulated during forbearance once the temporary hardship has been resolved. Subtle differences exist between each case, but here are some of the options that may be available:
- If the borrower can afford it, they can pay the missed payments in a lump sum. Understandably, very few borrowers are able to bring their loan current immediately, so other options remain.
- Under a repayment plan, borrowers bring their loans current over time by making monthly payments up to 50% larger than the contractual amount. This option could work for borrowers who experienced temporary hardship but whose overall financial health remained relatively unchanged.
For Fannie Mae and Freddie Mac loans: COVID-19 Payment Deferral:
- For borrowers with Fannie Mae or Freddie Mac loans, a COVID 19 Payment Deferral may be available. This program allows borrowers with up to 12 months of missed payments from COVID-related forbearance to defer these missed principal and interest payments to the end of the loan term, bringing their loan current. This option could be suited to borrowers who completed the forbearance plan, are able to resume their full monthly contractual payments, but cannot afford a full reinstatement or repayment plan.
For FHA-insured loans only: FHA Partial Claim:
- For FHA loans that are owner-occupied, we will evaluate the borrower for various options that may allow for deferral of forborne payments or modification of the terms of the loan. These include the COVID-19 National Emergency Standalone Partial Claim option for borrowers less than 30 days delinquent as of March 1, 2020, which allows deferral of forborne payments until the loan is paid off. If not eligible for the Coronavirus Standalone Partial Claim, the borrower will be evaluated for FHA’s other loss mitigation options to help repay the balance owed over time.
- If the borrower cannot qualify for any of the above options, modifications may be available and come in many varieties. The purpose is to modify the terms of the loan to identify a monthly payment the borrower can afford.
For VA loans or USDA loans:
- The borrower may also be eligible for a repayment plan, loan modification or extension plan, payment deferral, or other options that would allow for altering the terms of the mortgage to account for the forborne payments.
Q: Do you have any other advice for borrowers?
A: If a customer is struggling financially as a result of the pandemic, I strongly encourage them to reach out to us to discuss their current situation and the potential options available. I also recommend visiting our website here, where we have posted additional resources. We will continue to follow Agency or investor guidance as appropriate and communicate updates to our customers.
To access the Coronavirus Aid, Relief, and Economic Security Act (CARES), click here.
To access HUD – Loss Mitigation Options for Single Family Borrowers Affected by the Presidentially-Declared COVID-19 National Emergency in Accordance with the CARES, click here.
For the Federal Housing Finance Agency Coronavirus Assistance Information webpage, click here.
To access AmeriHome’s COVID-19 information click here.
Information current as of 06/02/20
Thank you for your time,
SVP, Servicing Operations