STILLWATER – The federal government’s lending program helped coronavirus-affected borrowers but ended in January. However, new guidelines have been introduced, said Cindy Clampet, assistant family resource management assistant at Oklahoma State University Extension.
“There are new loan forbearance rules that provide additional relief to people who have federal mortgage and student loan protection,” Clampet said.
To qualify for the Mortgage Forbearance Program, homeowners must:
• You are having financial difficulties due to the pandemic affecting yourself, immediate family members or their employment.
• Have a mortgage secured by federal agencies such as the Department of Housing and Urban Development, the Federal Housing Administration, the US Department of Agriculture, the Department of Veterans Affairs, Fannie Mae, or Freddie Mac.
“Other lenders may or may not offer similar indulgence offers,” Clampet said. “If you are struggling to meet your loan obligations, check with your lender to see if they have a program that can help you.”
The deadline for applying for HUD / FHA, VA, and USDA loans is June 30th. Currently, Freddie Mac and Fannie Mae have no deadline. The initial forbearance is typically three to six months and consumers can request an extension. The Forbearance can be extended for up to 12 or 18 months, depending on when the initial Forbearance began.
Those holding loans from Fannie Mae and Freddie Mac can apply for up to two additional extensions of three months each for a maximum of 18 months. However, Clampet said the borrowers must have been in active forbearance since February 28 this year.
Individuals who automatically pay federal government-sponsored student loans have been automatically granted leniency through September 30, which means loan payments are not due and no additional interest will be charged during the grace period.
“You can opt out of your indulgence and continue making payments if you choose,” said Clampet. “The US Department of Education has stopped collecting defaulted direct loans and Federal Family Education Loan Program (FFELP) loans and has extended the 0% interest rate to defaulted loans retrospectively to March 13, 2020.”
She added, “It also means that borrowers with FFELP who have been in default since March 13, 2020 are back in good standing and the education department is urging credit bureaus to remove records of the defaults.”
It is important to know that not all federal student loans are qualified. Some are owned by commercial lenders or the school the borrower attended. These lenders are not required to suspend interest and payments, but they can do so on a voluntary basis. Check with the lender to see if this is the case.
Clampet said credit card debt and auto loans are typically not eligible for loan leniency.
“If you cannot make your loan payments, contact the lender immediately, explain your situation, and see if there is anything they can do to help,” she said. “Some lenders may be able to restructure credit to benefit your situation.”
While the forbearance is something many families need right now, Clampet suggested trying to make the payments, if at all possible. Forbearance only extends the time it takes consumers to pay the loan.
“This is also a time when fraudsters come out of the woodworks. If someone asks you to pay a fee to suspend mortgage or student loan disbursement, don’t fall for it, ”she said. “This scam should be reported to the Federal Trade Commission.”