Section 4022 of the Coronavirus Stimulus Bill requires mortgage lenders and servicers to provide homeowners with up to 12 month forbearance on a Federally back mortgage loan**.
Section 4022 entitles a borrower to a 180 day loan forbearance with the right to ask for an additional 180 day forbearance so long as the borrower submits a hardship request stating that he or she is experiencing a financial hardship because of COVID-19.
The forbearance applies to first and second mortgages on cooperatives, condominiums and 1 to 4 family properties.
During a forbearance a borrower’s loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. During the forbearance a mortgage lender or servicer cannot charge or collect any fees, penalties or default interest.
It does not require a borrower to submit any documentation to prove financial hardship due to COVID-19. A mortgage lender or servicer must provide a forbearance once a borrower says he or she is experiencing a hardship because of COVID-19.
If you make a request for a forbearance make sure you remind the mortgage lender or servicer that under Section 4022 they must give a forbearance upon request.
**A Federally back mortgage loan is any loan insured by the Federal Housing Ad-ministration; insured under the National Housing Act; insured the Housing and Community Development Act of 1992; guaranteed or insured by the Department of Veterans Affairs; guaranteed, made or insured by the Department of Agriculture; or purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.
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