Across the state of Florida and the entire country, debates are raging about when to reopen the national and state economies. Meanwhile, the Corona virus continues to spread (albeit at a slower rate) and the economy continues its downward spiral, with over 26.5 million Americans facing unemployment and no real signs of recovery. Amid this turmoil, many are finding it difficult to make their mortgage or student loan payments, let alone ordinary monthly bills. For residents and businesses in South Florida unable to meet their financial obligations as a result of the pandemic, there are several relief options available.
Governor DeSantis’ Executive Order also stipulates that nothing contained therein “shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.” In other words, if you are able to meet these financial obligations, you should continue to do so.
The CARES Act also provides temporary relief to homeowners now struggling to pay their mortgages due to financial hardship stemming from the COVID-19 pandemic. Under the Act, mortgage forbearance is available to homeowners with FHA, VA, USDA, Fannie Mae and Freddie Mac and similar government-backed mortgages.
A forbearance allows a homeowner (i.e. the “borrower”) to halt or reduce his/her mortgage payments for a short pre-determined period. In general, your lender or loan servicer may offer a loan forbearance because it allows both parties to avoid time-consuming and costly legal battles or collection attempts. Due to the CARES Act, the forbearance process has been streamlined with most lenders, as they rush to comply with the new federal guidelines.
Forbearance or similar relief options may also be available to homeowners with non-government backed or private loans. Because the terms of these loans may differ, it’s important to check with your lender or loan servicer about the specific options available to you.
Here is a list of available relief options from the 10 largest lenders and loan servicers in the US:
No matter what type of mortgage or loan you have, keep in mind that forbearance does not nullify your normal payment obligations. Generally, you are still responsible for repayment of any missed or reduced payments in the future, unless your lender has agreed to “forgive” all or some of the loan. Again, this means you should continue to make regular monthly mortgage payments if you are capable of doing so.
The CARES Act also provides relief to individuals who can’t afford to pay certain federally held student loans due to financial hardship associated with the pandemic. As stipulated in the CARES Act, principal and interest payments on these loans are automatically suspended through September 30, 2020. Even if you normally have auto-pay set for these loans, the automatic suspension will stop any such payments.
You should be aware however, that not all federal student loans are held by the Department of Education or subject to the provisions of the CARES Act. For example, commercial lenders actually own some loans made through the Federal Family Education Loan (FFEL) Program. Furthermore, the college or university you attended may own certain Perkins Loans given to their students. It is therefore important to see if provisions of the Act are applicable to your specific loan(s) or if different options may be available.
Finally, if you are currently involved in litigation of any sort, you should be aware that a suspension of many Florida court proceedings remains in effect through the end of May 2020. These include non-essential court matters, such as civil jury trials.
All such matters should be “rescheduled, postponed or canceled,” as per Administrative Order AOSC20-23 issued by Florida Supreme Court Chief Justice Charles Canady on April 6, 2020. The only exception is for those matters that “can be conducted by conference call or other technology that would prevent the need for in-person appearances.”
On April 21, 2020, Chief Justice Canady also established the “Workgroup on the Continuity of Court Operations and Proceedings During and After COVID-19” to develop a working plan for the continuation of court operations and proceedings in a manner that protects health and safety. The Workgroup is made up of various judges statewide and is tasked with presenting its findings to the Chief Justice “as they are developed” to avoid costly time delays.
If you are a current client with Loshak Leach LLP, please contact us to see how your case may be affected.
The COVID-19 pandemic continues to cause financial hardship for many Floridians and people across the country. If you have specific financial concerns associated with your debt obligations or inability to pay your bills, please feel free to reach out to Loshak Loshak LLP to see how we can help. You can reach us online or by calling our Fort Lauderdale office at (954) 334-1122.