FROM OUR BLOG
April 13, 2020

The Cares Act is robust, with many options for individuals. Below is a quick summary of assistance that may assist you as an individual:

 

Mortgage forbearance:

Putting your mortgage into forbearance may or may not be a good idea. It is intended for those that cannot make their payment(s), and as a last resort. The long-term consequences are to be determined, and forbearance may result in a large balloon payment at the end of the forbearance term.

If your loan is serviced by Sierra Pacific, DMI or Loancare please click the link below for instructions on how to apply for forbearance.

https://product.sierrapacificmortgage.com/covid19-questions/

 

For homeowners with federally-backed mortgage loans hit with financial hardship due to COVID-19, you may request forbearance on your mortgage, regardless of delinquency status, by 9 submitting a request to the borrower’s servicer; no documentation proving financial hardship is required. No additional fees, penalties or interest shall accrue, and the servicer shall not charge for reinstatement or for establishing a repayment plan. Additionally, borrowers are entitled to an extension or modification of the loan for at least the same length as the forbearance at no cost or penalty. Federally-backed mortgage loan servicers may not initiate foreclosure processes or proceed with judgements, sales or evictions for at least 60 days after March 18, 2020. Additionally, federal regulators through Fannie and Freddie are making up-to-12 month forbearance available for homeowners with loans guaranteed by them: This means about half of the mortgages in the country. Fannie and Freddie are also telling lenders not to report late payments or the like to credit bureaus if they’re in forbearance.

For renters, the CARES Act provides additional protections from eviction. Owners of federally-subsidized properties with more than five units, or properties with a federally-backed mortgage loan may not evict or charge penalties or fees to a tenant who cannot pay rent for 120 days following this Act. This includes LIHTC housing. Multifamily owners will be eligible to receive forbearance on those loans for 90 days, though their financial hardship due to COVID-19 must be documented, and they should contact their loan servicer. During the forbearance period they may not evict tenants or charge late fees or other penalties for nonpayment of rent. Owners of federally-subsidized properties or properties with a federally-backed mortgage loan may not evict or charge penalties or fees to a tenant who cannot pay rent for 120 days following this Act.

 

Cash payments

Cash Payments to Americans Providing Recovery Rebates for Individuals: All individuals with a Social Security Number will receive rebates worth $1,200 for individuals ($2,400 for couples) and $500 per child under 17. A family of four would receive $3,400. Rebates phase out above $75,000 for singles filers, $112,500 for heads of household, and $150,000 for married couples filing joint returns. There is no income floor or phase-in. Each member of your family must have a Social Security Number (included on your last tax return) to claim a rebate. People receiving Social Security or Supplemental Security Income (SSI) are eligible. Rebates will not be counted as income for income-related programs like Medicaid, SSI or SNAP. Rebates will not be subject to garnishment, except if back child support is owed. You must file a tax return this year (or have filed last year) to receive a rebate check (or direct deposit). Rebates will start going out in the weeks following passage of the Act.

 

Unemployment Compensation

The federal CARES Act extended benefits for unemployment by:

  • Increasing weekly unemployment benefits by $600
  • Extending unemployment benefits by 13 weeks
  • Expanding those who qualify for unemployment to include self-employed workers (including gig workers and independent contractors), part-time workers, and those who have a limited work history

https://www.colorado.gov/pacific/cdle/unemployment

 

Student loan relief

The U.S. Department of Education automatically placed federal student loan borrowers in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment. From March 13, 2020, through Sept. 30, 2020, the interest rate is 0% on the following types of federal student loans owned by ED:

  • Defaulted and nondefaulted Direct Loans
  • Defaulted and nondefaulted FFEL Program loans
  • Federal Perkins Loans

https://studentaid.gov/announcements-events/coronavirus

 

401k withdrawals

Creating Coronavirus-Related Distributions and Loans from 401(k) Plans and other Defined Contribution Retirement Plans: You may be allowed to take up to $100,000 out of your account balance in 2020 if you or a family member test positive for the coronavirus or you suffer economic harm because of the coronavirus. You may also be allowed to borrow this amount from your account balance. Contact the administrator for your retirement plan to find out whether your plan will offer these distributions or loans, and if it does, how to request such a distribution or loan. If you have a plan loan outstanding and you are laid-off or terminated and cannot repay your loan, you are allowed an extra year to repay the loan. Contact the administrator for your plan for more details. Waiving the 10% Additional Tax on Early Distributions from IRAs, 401(k) Plans and other Defined Contribution Retirement Plans: The 10% additional tax on pre-age 59 ½ distributions from IRAs, 401(k) plans and defined contribution plans does not apply for 2020 if you, your spouse or child tested positive for the coronavirus, or if you suffer economic harm because of the coronavirus—such as being laid-off, furloughed or having your hours reduced because of the virus, not being able to work because of a lack of child care due to the virus, or you have to close or reduce the hours of a business you own because of the virus. Please go to www.irs.gov for more details. The IRS will be providing information soon.

 

Small Business Relief

Small Business Relief Note that additional information regarding Small Business Administration (SBA) loan relief, applying for economic disaster grants, and additional small business assistance can be found at https://www.wyden.senate.gov/download/covid19-small-business-relief-qanda 5 Employee retention tax credit, including advance payments: These credits are available to any employer, including non-profits, whose business has been fully or partially closed as a result of a COVID-19 related government order, or which has seen at least a 50 percent drop in quarterly gross receipts as compared to 2019. The wages that can be counted toward the credit depend on the size of the employer — employers with 100 employees or less can claim the credit for wages and health insurance costs for all employees. Employers with more than 100 employees can only claim wages and/or health insurance for employees that are furloughed. Regardless of employer size, the credit is limited to $10,000 of wages and benefits per employee. Employers with less than 500 employees should be aware that the retention credits are only available if they forgo taking the new SBA payroll loans provided under the bill. For employers looking to avail themselves of the credits, they should be alert for forthcoming IRS guidance, including on how to access advance credit payments, or talk to their payroll processor (if they use one). Providing Loan Relief for Businesses with Existing SBA Loans: The CARES Act provides $17 billion to ensure that every small business with a loan from the Small Business Administration can be relieved of their loan payments—including principal, interest, and fees—for the next six months. This applies to SBA loans—specifically the 7(a), Community Advantage Pilot Program, 504, and microloan programs. For small businesses looking to avail themselves of this loan relief, visit https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. For Small Businesses and Other Entities Looking to Keep their Businesses Running and Payroll Protected: The CARES Act includes nearly $350 billion in funding for a provision to create a Paycheck Protection Program (PPP) that will provide small businesses and other entities with zero-fee loans of up to $10 million. These temporary new loans do the following: ● Forgive up to 8 weeks of average payroll and other costs if the business retains its employees and their salary levels.

  • Defer principal and interest for up to a year and waive all borrower fees. This temporary emergency assistance through the U.S. Small Business Administration (SBA) and the Department of Treasury can be used in coordination with other COVID-financing assistance established in the bill or any other existing SBA loan program. If you are among one of the following you may be eligible:
  • small business, nonprofit, veteran’s organization, or Tribal business concern with no more than 500 employees, or the applicable size standard for the industry as provided by SBA, if higher.
  • sole-proprietor, independent contractor, or other self-employed individual 6
  • businesses with more than one physical location that employs no more than 500 employees per physical location (limited to certain industries). Entities can receive up to $10 million through December 31, 2020. The CARES Act provides a formula by which the loan amount is determined. The formula is tied to payroll costs incurred by the business. For more information on how to apply for these loans, please consult the SBA at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. Providing Emergency Economic Advances: The CARES Act includes $10 billion in funding to provide an advance of $10,000 to small businesses and nonprofits that apply for an SBA economic injury disaster loan (EIDL) within three days of applying for the loan. EIDLs are loans of up to $2 million that carry interest rates up to 3.75 percent for companies and up to 2.75 percent for nonprofits, as well as principal and interest deferment for up to 4 years. The loans may be used to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. The EIDL grant does not need to be repaid, even if the grantee is subsequently denied a loan under EIDL, and may be used to provide paid sick leave to employees, maintaining payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. Eligible grant recipients must have been in operation on January 31, 2020. The grant is available to businesses with fewer than 500 employees, private nonprofits, cooperatives, a tribal business concern, and ESOPs with fewer than 500 employees or any individual operating as a sole proprietor or an independent contractor. For more information, consult the SBA at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.

 

 

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Sierra Pacific Mortgage Company, Inc.

Sierra Pacific Mortgage NMLS# 1788. Michael Shotnik NMLS: 218281, CO License: 100017466. Regulated in Colorado by the Division of Real Estate #988320. To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.