As coronavirus unfolds, new homeowners need our help more than ever

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There's a crisis upon us, and the economic repercussions are only beginning to be understood. What we do know is that COVID-19 is causing a severe shock and loss of income to millions of homeowners, in particular new homeowners who the federal government and mortgage industry have helped overcome the barriers of homeownership.

We also know that today's troubling environment is very fluid, and that things could change in an instant. Currently, there is a government-backed payment holiday for those who have lost their job or income as a result of the pandemic. But there are still uncertainties by not addressing an individual borrower’s overall financial picture.
What can be done in the meantime? For borrowers who bought their homes using down payment assistance, we need to be doing everything possible to ensure these homeowners — particularly first-time homebuyers — are able to keep their homes during this crisis and beyond.

Everyone in our country should have access to affordable housing. That's why we help creditworthy low- and moderate-income individuals buy homes through DPA programs, which help borrowers clear the down payment hurdles that keep many from realizing their homeownership dreams. But this is only one part of the mission. We must also be committed to helping borrowers stay in their homes, especially during unique circumstances like the pandemic we face today.

At CBC Mortgage Agency, the Chenoa Fund helps many of our borrowers receive a second mortgage that is forgivable. But as a condition of that forgiveness, a borrower needs to maintain timely payments on the first mortgage during the first three years of the loan. Since the pandemic, questions have poured in from borrowers who are concerned about the status of their loan forgiveness, should they lose their jobs in the current economic environment.

In response, we announced that any borrowers affected by the economic fallout from the coronavirus will not lose the forgivable feature of their down payment assistance loan. We are also staying in touch with borrowers and educating them after their loans close by utilizing a 12-month post-purchase support program.

We implore the rest of the industry to follow suit in their DPA programs and other forms of homebuyer assistance.

For example, our partner, Money Management International, a HUD-approved, nonprofit credit counseling organization, helps borrowers in transition from renting into homeownership. They are now assisting these borrowers by reaching out through regularly scheduled phone calls in addition to emails and texts and counseling them through this challenging time.

So, what should we be advising borrowers?

First, as the barrage of constant coronavirus news coverage unfolds, homeowners need to know not to overreact. Being stressed about the virus and its impacts, including the effect on income, is a natural response. However, we must counsel them not to panic and make irrational decisions that could worsen the financial blow on themselves and their families.

Secondly, we can help borrowers reduce the impact of the pandemic by advising them to cut unnecessary expenses. This includes not overbuying supplies and not making future travel and event plans that include non-refundable fees. Also, we must urge borrowers to reach out to their creditors if their income is being disrupted by the pandemic.

Lastly, borrowers should be encouraged to stay current on their mortgages if possible. If a borrower is facing economic disruption, counsel them by reviewing their budget and finding ways for them to prioritize their spending.

Whether it's following up on DPA programs or making monthly mortgage payments, we must all remain committed to protecting homeownership during this time of difficulty. Over the next weeks and months, we can expect to receive more calls from borrowers asking for help in coping with their challenges. It’s our job to continue to step up and provide assistance when possible.

Doing so is just as important as helping borrowers overcome down payment barriers and other obstacles so they can afford the dream of homeownership — which is a dream worth protecting, especially today.

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Affordable housing Coronavirus First time home buyers Down payments Housing affordability Distressed