Homeowners across the United States are experiencing financial distress. With that financial distress comes confusion about their options. Governors, state legislators, and to a lesser degree the federal government have enacted measures to protect consumers from foreclosure in Alaska.
The data so far shows that the most vulnerable home markets are clustered in the Northeast and Florida. The Pacific Northwest seems somewhat insulated for the time being. But citizens in every state are facing the expiration of measures meant to protect them from temporary financial instability and asking themselves what their options are. Let’s take a look at the situation on the ground in Alaska.
On May 20, 2020 a moratorium on foreclosures in Alaska was enacted by the state legislature and signed into law by Alaska’s governor, Mike Dunleavy. This bill only protects primary residences — vacant and abandoned houses are not included. It also only protects homeowners who are experiencing financial hardship due to coronavirus. Alaska declared a state of public health emergency on March 11, 2020; the foreclosure moratorium will only last as long as that declaration remains in effect. The state of public health emergency due to novel coronavirus has already been extended to September 1st, but it’s far from clear what will happen after that.
So, what can affected homeowners in Alaska do?
If your mortgage is federally subsidized
Federally subsidized mortgage-holders are entitled to a 180-day forbearance, regardless of their delinquency status (that is to say, even if they are currently facing foreclosure.), as long as the reason for their hardship is directly or indirectly related to coronavirus. This forbearance can be extended for a total of 180 days. To get this forbearance, borrowers should contact their servicer. Remember that forbearance is not forgiveness — you will still have to make the missed payments eventually, either in a lump sum or by adding them on to the end of the mortgage. Carefully review what your servicer is offering, and check it against what you’re entitled to, as there have been instances of mortgage servicers being opaque about homeowner’s rights.
If your mortgage is not federally subsidized
Non federally subsidized mortgages have fewer protections, but that doesn’t mean they are completely unprotected. Under Alaska’s moratorium, even these mortgages are protected from foreclosure. However, you must have notified your lender of your financial hardship before June 30, 2020. If you didn’t do this, don’t worry — your lender still may offer concessions, such as waiving of late fees or modification of your loan. It’s recommended that you get in touch as soon as possible. If you enter into an agreement with your servicer and stick to the terms of your agreement, the CARES Act will prevent lenders from reporting your loan as ‘delinquent’ to credit agencies, so don’t skip payments or send less than you owe without first negotiating with your lender.
Bottom line:
Work with your lender, sooner rather than later. Read everything very carefully, and keep an eye on the declaration of public health emergency in your state and at the federal level. These protections are only temporary — life, and your mortgage payment, will return to normal someday.