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Quarter 2 2021, Volume 9 Issue 2

CFPB Mortgage Forbearance and Reverse Mortgage Resources

The Consumer Financial Protection Bureau (CFPB) is committed to providing consumers with information to protect and manage their finances. The CFPB created resources for housing counselors to help their clients navigate challenging financial topics. The chart below provides an overview of helpful resources released by the CFPB to assist counselors in working with clients on mortgage forbearance and reverse mortgages.

Mortgage Forbearance and Relief

Reverse Mortgages

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows homeowners to request up to 360 days of forbearance on their mortgage loans. Homeowners can apply for mortgage forbearance on federally backed loans if they:

  • Are experiencing economic hardship because of the COVID-19 national emergency or due to illness or injury and rising healthcare costs
  • Have experienced damage to their homes due to a natural disaster

Forbearance and mortgage relief programs may also be offered for privately owned loans. To apply for forbearance and mortgage relief, homeowners can follow these steps:

  • Contact the mortgage servicer on their mortgage statement and explain their situation.
  • Find out if they qualify for protection under the CARES Act.
  • Ask about their options for missed payments, potential fees, and payment due dates.
  • Make sure they receive a written copy of the repayment plan and that they understand the terms.

Contacting the mortgage servicer is the best place to start and the best way to avoid common scams that promise to help homeowners avoid foreclosure. Housing counselors can help their clients identify their mortgage servicer’s contact information. Repayment options may vary depending on the homeowner’s situation.

The Guide to Exiting or Renewing Forbearance contains a flowchart to help clients better understand their options.

The Home-Retention Exits out of COVID-19 Related Forbearances provides a list of options available to consumers whose loans are backed by federal agencies.

Reverse mortgages are loans available to homeowners over 62 years old, allowing them to borrow money and use their homes to secure loans. The borrower is not required to make monthly payments. Instead, the loan balance grows over time as interest and fees accrue, causing the homeowner’s equity on the home to decrease. Borrowers are required to pay off the loan when the last borrower leaves the home, which is usually done with the proceeds of the home sale.

A homeowner with a reverse mortgage is responsible for paying property taxes, homeowner’s insurance, and costs associated with home repair. Homeowners who do not follow these guidelines may be at risk of foreclosure.

The CFPB has a dedicated reverse mortgage portal that includes resources, reports, and questions and answers. All CFPB materials are available in both English and Spanish.

For additional Home Equity Conversion Mortgage (HECM) resources for housing counselors, visit the HECM Origination Counseling page on the HUD Exchange.

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