The CARES Act prohibits mortgage lenders from foreclosing on any federally-backed mortgage for a 60-day period following March 18, 2020.
• This covers mortgages insured or guaranteed by HUD, Fannie Mae, Freddie Mac, the Veterans Affairs Department, and the Agriculture Department.
• The law also authorizes borrowers experiencing hardship as a result of the coronavirus pandemic to request up to 180 days forbearance on their mortgage payments.
• If needed, an additional forbearance period of up to 6 months may be requested by the borrower and must be approved by the mortgagee.
Consumer Credit Relief
The CARES Act prohibits banks, lenders, and other entities that provide information to credit reporting agencies from treating a deferment, partial payment, or a credit forbearance requested by a consumer as a result of the coronavirus pandemic as negative credit information.
• This provision would only apply for consumers in good standing who fulfill all terms and requirements of a forbearance or modified payment agreement.
• The prohibition will remain in place until 120 days following the end of the declared COVID-19 national emergency.
Student Debt Relief
The CARES Act defers student loan payments, principal, and interest through September 30 for all borrowers of federally owned loans.
• People who drop out of school because of the pandemic will not be required to return portions of any Pell Grants or federal loans they received.
• The CARES Act waives a requirement that schools return certain amounts of grants or loans to the Department of Education if a student drops out of school.
• If students drops out due to the pandemic, the current academic term doesn’t count toward their lifetime eligibility limit for receiving Pell Grants or subsidized federal loans.
• These provisions are expected to provide relief to 95% of student loan borrowers.