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CARES Act provides protections to VA loan holders

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act, Public Law 116-136. The CARES Act protects borrowers with Federally-backed mortgage loans who are experiencing financial hardship due to the COVID-19 national emergency.

The CARES Act provides multiple protections on your VA-guaranteed loan if you experience financial hardship directly or indirectly caused by the COVID-19 emergency, regardless of your loan’s default status. These protections include:
  • A defined forbearance period of up to 180 days, with the possibility for extending it for another 180 days
  • A foreclosure and eviction moratorium for 60 days starting March 18, 2020
  • Instructions on how mortgage servicers are to report to the credit agencies. For example, borrowers who have requested the COVID-19 Forbearance option are not considered to be delinquent for purposes of credit reporting.
A forbearance is a defined time period of one month or longer during which your mortgage servicer agrees to accept reduced payments or no payments. During a forbearance under the CARES Act, your mortgage will continue to accumulate interest, but not late fees or other penalties.

The payments will still be due on your loan, just not during the forbearance period. A forbearance allows you time to resolve the reason that you can’t pay the regular monthly installment and get back on a regular monthly repayment schedule again.

Forbearance in the CARES Act is broken down into two pieces; an initial period and an additional period. For the initial period, you may notify your mortgage servicer that you are financially affected by the COVID-19 emergency and request up to 180 days of forbearance. You don’t have to use the entire forbearance period if you can resume payments sooner.

For the additional period, you may notify your mortgage servicer that you are still financially affected by the COVID-19 emergency and request up to 180 additional days of forbearance. As with the initial period of forbearance, you don’t have to use the entire period of forbearance if you can resume payments sooner.

You simply need to contact your mortgage servicer and request a forbearance because of financial difficulties due to the COVID-19 national emergency.

For more information, visit the VA benefits page here. 




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