Minnesota Commerce Commissioner Steve Kelley shared new information about mortgage relief – including delayed and reduced monthly payment options – available for homeowners with federally backed loans.

“The COVID-19 pandemic has caused financial hardship for millions of American homeowners and thousands across Minnesota,” Kelley said in a May 21 release. “This information will help homeowners make important decisions about their financial obligation, mortgage assistance and their rights to pause or delay certain mortgage payments in these challenging times.”

The new information clarifies borrowers’ rights to mortgage payment forbearance and foreclosure protection under the federal Coronavirus Aid, Relief and Economic Security Act (CARES Act). Presented as a Consumer Relief Guide (www.csbs.org/mortgage-relief-coronavirus), the information is published by the Conference of State Bank Supervisors, of which the Minnesota Department of Commerce is a member, and the Consumer Finance Protection Bureau.

For example, a borrower of a federally backed mortgage loan who is experiencing a financial hardship due to the COVID-19 pandemic may be able to obtain a 180-day pause in paying their mortgage or temporarily lower mortgage payments.

Mortgage forbearance or mortgage relief is a temporary reduction or suspension of monthly payments and is not loan forgiveness. Borrowers still need to repay any missed or reduced payments in the future. However, while in forbearance, partial payments are acceptable and will reduce the amount owed in the future.

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Under the CARES Act, there are no fees associated with obtaining forbearance. Consumers are warned to be wary of anyone offering help with forbearance for a fee.

Additionally, foreclosure actions are frozen until June 30 on loans federally backed by Fannie Mae, Freddie Mac and HUD, which includes single family FHA loans and reverse mortgage HECM loans.

Loan types that are federally backed include:

  • Conventional loans purchased or securitized by Fannie Mae and Freddie Mac

  • Federal Housing Administration (FHA), including Home Equity Conversion Mortgage (HECM)

  • U.S. Department of Veterans Affairs (VA)

  • U.S. Department of Agriculture (USDA), including USDA Direct and USDA Guaranteed

Privately held loans are not eligible for forbearance relief under the CARES Act, however consumers should still contact their mortgage servicer to ask about assistance programs.

For more information, contact the Commerce Department’s Consumer Services Center at consumer.protection@state.mn.us or 651-539-1600 or 800-657-3602.

The Minnesota Department of Commerce’s mission is to protect the public interest, advocate for Minnesota consumers, ensure a strong, competitive and fair marketplace, strengthen the state’s economic future and serve as a trusted public resource for consumers and businesses. Learn more at mn.gov/commerce.