What You Need to Know About CARES Act Mortgage Forbearance

by | Feb 8, 2022 | Bankruptcy

Understanding Your Mortgage Relief Options Post-CARES Act


The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in March 2020. The primary federal economic response to the COVID-19 pandemic, the CARES Act contains various relief measures, including for certain mortgage foreclosure protections.

However, the protections have primarily come to an end. Many financially distressed homeowners are trying to navigate their options. In this guide, our New Jersey bankruptcy lawyer provides a guide to the most important things to know about CARES Act mortgage forbearance in 2024.


What is Mortgage Payment Forbearance?


Forbearance is a temporary agreement between you and your mortgage servicer that allows you to pause or reduce your monthly payments for a specified period due to financial hardship. It’s important to remember that forbearance doesn’t eliminate your debt; you’ll still be responsible for the missed or reduced payments, plus any accrued interest, later on.


CARES Act and Mortgage Forbearance

The CARES Act provided essential protections for homeowners facing hardships during the pandemic. It mandated servicers of federally backed mortgages to offer forbearance plans without penalty or fees. However, these specific CARES Act protections largely expired in March 2022.


Current Forbearance Options

Although the CARES Act mandates have ended, forbearance remains an option for eligible homeowners, depending on your circumstances and loan type. Here’s what you need to know:

1. Forbearance Under Your Loan Agreement

Many loan agreements contain hardship provisions allowing for forbearance in cases of documented financial hardship. These plans might have stricter terms than the CARES Act protections but can still offer temporary relief.

2. Forbearance Programs

Government-sponsored programs like the Home Affordable Modification Program (HAMP) or Federal Housing Administration (FHA) streamline the forbearance process for mortgages backed by these agencies. They offer more flexible repayment options compared to standard forbearance agreements.

3. Private Servicer Programs

Even for non-federally backed mortgages, servicers might offer forbearance programs based on individual circumstances. Contact your servicer directly to inquire about their hardship programs and eligibility requirements.


Understanding Your Rights

Regardless of the chosen program, remember the following key points:

  • Requesting forbearance is not an automatic right. Document your financial hardship and discuss options with your servicer before formally requesting forbearance.
  • Understand the terms of the agreement: Clearly understand the length of the forbearance period, repayment options, and any potential fees or accrual of interest.
  • Seek professional help if needed: Housing counselors or legal professionals can guide you through the process and advocate for your rights.

Remember, forbearance is a temporary solution and shouldn’t be considered a long-term fix. Addressing the underlying financial hardship and exploring long-term solutions like loan modification or refinancing is crucial for securing your financial stability and homeownership long-term.


COVID-19 Related Mortgage Foreclosure Moratoriums are Over in New Jersey


As part of the CARES Act, a moratorium was put into place that temporarily prevented mortgage foreclosures. Technically, the federal mortgage moratorium ended in early August of 2021. The New Jersey state mortgage foreclosure moratorium remained in effect for a few months longer—until November 15th. Nonetheless, all COVID-19 foreclosure moratoriums are now over. Foreclosures have resumed and are expected to pick up speed in the coming months.


An Overview of Your Options If You Are Still Struggling to Make Mortgage Payments

The end of the CARES Act foreclosure moratorium does not mean everyone behind on their payments will immediately face foreclosure. As explained by the Consumer Financial Protection Board (CFPB), federal regulations have been implemented that a “mortgage servicer cannot require you to repay your skipped payments in a lump sum once the forbearance period ends.”

That being said, some financially distressed homeowners may be at a significant foreclosure risk in the near future—especially if they are behind on forbearance payments. Here are three options if you are still struggling with your monthly mortgage payments:

  1. Mortgage Assistance: You may be eligible to receive some form of financial support through the New Jersey Emergency Rescue Mortgage Assistance (ERMA) program. A maximum of $35,000 in support is available for qualifying borrowers.
  2. Foreclosure Mediation: It may be possible to work out some form of agreement with your lender or mortgage service company. New Jersey currently has an expanded foreclosure mediation program in place. Our law firm helps people navigate foreclosure mediation.
  3. Personal Bankruptcy: Personal bankruptcy (Chapter 7 or Chapter 13) may be the best option if you and your family are dealing with severe financial hardship. Among other things, a bankruptcy filing can pause an active foreclosure case. If you have any questions, contact our New Jersey bankruptcy lawyer.


Contact Our New Jersey CARES Act Mortgage Forbearance Attorney for Immediate Help

At the Law Offices of Wenarsky & Goldstein LLC, New Jersey, personal bankruptcy lawyer has the skills and experience to help people and families dealing with financial distress. If you have any questions about CARES Act mortgage forbearance, we are ready to help. Contact us today at 973-221-5919. We provide legal representation to clients in North Jersey and New York.

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