Minnesota Attorney General Keith Ellison, Governor Tim Walz, and Lieutenant Governor Peggy Flanagan last week announced a commitment by 31 Minnesota financial institutions to provide mortgage-relief options to customers facing financial hardship caused by COVID-19 for homeowners not covered by the CARES Act.
Under this framework, participating financial institutions have agreed to offer the following relief options:
- 90-day forbearance period for customers facing financial hardship caused by COVID-19
Participating financial institutions will offer mortgage-payment forbearances of up to 90 days to single- or multi-family mortgage customers directly impacted by COVID-19. The framework went into effect yesterday, July 1, 2020, so qualifying customers can begin applying for forbearance immediately.
- Customers accessing forbearance will not be required to make a lump-sum payment at the end of forbearance plan
Participating financial institutions will not require single-family customers who qualify for forbearance under this framework to make a lump-sum payment at the end of the forbearance plan. Instead these institutions will work with borrowers on repayment options, which may include:
- Allowing customers to add the reduced or missed payments over the lifetime of their loans; or
- Extending the maturity of the loan to make up for the missed payments.
- No late fees or negative credit reporting for customers in a forbearance plan
For single-family customers who are in an active forbearance plan under this framework, the participating financial institutions will:
- Freeze all mortgage-related late fees for missed payments; and
- Not report late or missed payments with credit reporting agencies.
This framework was negotiated by Ellison’s office and Walz’s office, and was supported by the Minnesota Department of Commerce and Minnesota Housing.
“In the next few weeks, we may see a dramatic increase in the number of foreclosures and evictions. I am very pleased to announce that these banks and credit unions across Minnesota are working together to try to mitigate the damage,” Ellison said. “I thank each of the participating institutions for stepping up to the plate to help Minnesotans that are struggling because of COVID-19 and for recognizing that we are all better off when every Minnesotan has stable housing.”
“Minnesota families have been hit hard by the COVID-19 pandemic, and banks across the state have been working with their customers to help find solutions,” said Walz. “This initiative provides some added flexibility to Minnesotans who need help affording their mortgage payments during this unprecedented time.”
“The COVID-19 crisis falls hardest on Minnesotans who were already in crisis. For many low-income families or Minnesotans who have lost jobs or sources of income, their housing stability has been put at risk,” said Flanagan. “Mortgage relief is one way that we can provide some comfort and stability for those most impacted. I am thrilled that we can work in partnership to offer this relief.”
US Bank is one of the participating institutions. Andy Cecere, President and CEO of US Bancorp, said: “I want to thank Governor Walz, Lt. Governor Flanagan, and Attorney General Ellison for their leadership in these difficult times. At U.S. Bank, we are committed to serving our community and we have aided thousands of customers who are facing financial pressure due to the coronavirus. We remain committed to helping and encourage our customers needing assistance to contact us digitally or over the phone to find the best solution for their situation.”
Jeanne Crain, President and CEO of Bremer Financial Corporation also praised the commitment. “Bremer’s purpose is to cultivate thriving communities, and we have long recognized home stability as foundational to strong communities. We have provided financial assistance to our customers affected by COVID-19 over the past months, and we remain steadfast in our promise to help. I appreciate the Attorney General’s, the Governor’s, and the Lieutenant Governor’s attention to this important issue. Bremer is committed to supporting their efforts to help Minnesotans through these challenging times.”
To apply for forbearance offered by this framework homeowners should first ensure that the financial institution servicing their mortgage is participating in this commitment. If they are, contact and work with them directly to apply for relief offered under this framework.
Participating financial institutions will offer forbearance up to 90-days. Qualifying customers can apply for forbearance under this framework, now through October 1, 2020.
Participating institutions will not charge you late fees for missed payments for homeowners as long as they are in forbearance under this framework. While homeowners are in forbearance under this framework, the participating institutions will not report late, missed, or skipped payments with credit-reporting agencies.
Financial institutions may report a forbearance, which will not impact a FICO score, but may impact credit scores furnished by other credit-score providers. It may also impact your ability to borrow in the future. Contact your mortgage servicer directly to see if they will report the forbearance to credit agencies.
Additionally, homeowners taking advantage of the forbearance plan offered in this framework, are still responsible for repaying the mortgage payments or the balance of reduced mortgage payments that you missed.
However, participating financial institutions will work with program participants to explore repayment options. Participants are not required to make a lump-sum payment of the reduced or missed payments under this famework. There will be other options for repayment, which may include:
- Adding the reduced or missed payments over the lifetime of the mortgage, which usually leads to higher monthly mortgage payments; or
- Extending the maturity of the mortgage to make up for the missed payments.
Ellison’s office recommends discussing which repayment options best fits when first applying for forbearance. Contact your mortgage servicer to discuss your options.
If you continue having trouble making your mortgage payments due to COVID-19 after October 1, 2020, contact your lender as early as possible.