What is the CARES Act?
The CARES Act is a piece of federal legislation that was signed into law from March 27, 2020 through April 10, 2023. It required mortgage servicers to provide various forms of COVID-19-related relief to borrowers with particular loan types (see below), including:
- For all covered loans where the borrower has requested forbearance, the mortgage servicer was required to:
- Grant such forbearance for up to 180 days;
- Extend such forbearance for an additional period of up to 180 days (if requested by the borrower); and
- Waive all fees, penalties or interest that accrued during forbearance beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract.
- For all covered loans that are not secured by a vacant or abandoned property (regardless of whether relief is requested), mortgage servicers could not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of
sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 18, 2020.
Importantly, this legislation is not applicable to all loan types and only applies to federally backed mortgage loans, which constitute less than half of our serviced loans, and include residential loans that are (a) owned or securitized by the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac); (b) guaranteed or made by the Department of Agriculture (USDA); (c) insured or guaranteed by the Federal Housing Administration (FHA) or the Department of Veteran
Affairs (VA), or Department of Agriculture (USDA); or (d) insured or guaranteed under either section 255 of the National Housing Act (covering home equity conversion mortgages) or sections 184 or 184A of the Housing and Community Development Act (covering
programs for Indian families, housing authorities, and tribes and for Hawaiian home lands).
Additional information about the CARES Act is available from the Consumer Financial Protection Bureau (CFPB).
How do I determine what kind of loan I have?
If you’re not sure what type of loan you have, you can consult the following resources:
I was on a COVID forbearance plan. Will my 1098 be impacted?
- Check your HUD-1 Statement or Closing Disclosure from your loan closing. The top of the first page of the document contains a series of check boxes. The “FHA” box should be checked if you have a loan insured by the Federal Housing Administration. Similarly,
the “VA” box should be checked if you have a loan guaranteed or insured by the Department of Veterans Affairs.
- You can use the Federal Home Loan Mortgage Corporation (Freddie Mac) loan lookup tool (available at https://ww3.freddiemac.com/loanlookup/) to determine if your loan has been purchased
or securitized by Freddie Mac.
- You can use the Federal National Mortgage Association (Fannie Mae) loan lookup tool (available at https://yourhome.fanniemae.com/calculators-tools/loan-lookup#_blank)
to determine if your loan has been purchased or securitized by Fannie Mae.
- If in doubt, you can call us at 1-800-936-8705. However, in light of elevated hold times during the COVID-19 pandemic, we encourage you to utilize the above self-help resources to the extent possible.
If you did not make payments while on a forbearance, then the amount of mortgage interest received from payer(s)/borrowers (Box 1 on the Form 1098) may be less than prior years. Since every situation is unique, we encourage you to reach out to a trusted tax
professional for advice before the end of the tax year.
Will I be required to make a lump sum payment at the end of my forbearance period?
If you cannot afford to pay the missed payments in a lump sum at the end of forbearance, you will not be required to do so, as long as we reach an alternate solution, which we will call you at the end of your applicable forbearance period to discuss. This could
include a repayment plan, deferral of the payments to the end of the loan, or a loan modification, depending on the investor guidelines and status of the loan.
What specific options will be available for me at the very end of my forbearance period?
As a mortgage servicer, PHH Mortgage must comply with guidelines set forth by the entity that is the owner or investor of the mortgage. These entities include Fannie Mae, Freddie Mac, Department of Veterans Affairs (VA), the Federal Housing Administration (FHA)
and other private companies.