What Is CARES Act Mortgage Forbearance?
CARES Act mortgage forbearance is a federally mandated right that lets homeowners with government-backed loans temporarily suspend or reduce mortgage payments when they experience financial hardship — without penalty, added fees, or damage to their loan terms. Signed into law in March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act created immediate mortgage relief for millions of Americans hit by pandemic-related income loss.
If you are struggling to make mortgage payments, understanding your forbearance rights is the first step. If you have decided the financial pressure is no longer sustainable, selling your house for cash is a faster alternative that eliminates mortgage stress entirely. This guide covers both paths in full detail.
Forbearance is not the same as forgiveness. Every paused payment must eventually be repaid. Before requesting forbearance, you need to understand exactly how repayment works, how your credit is affected, and whether selling might be a better long-term decision for your financial health.
Who Qualifies for CARES Act Mortgage Forbearance?
You qualify for CARES Act forbearance if your mortgage is backed by the federal government. The single eligibility requirement under the CARES Act is that you experience financial hardship — directly or indirectly — due to the COVID-19 pandemic. No documentation or proof is required beyond your verbal or written attestation to your loan servicer.
The five covered loan types are:
- FHA loans (Federal Housing Administration)
- VA loans (Department of Veterans Affairs)
- USDA loans (U.S. Department of Agriculture)
- Loans owned or backed by Fannie Mae (Federal National Mortgage Association)
- Loans owned or backed by Freddie Mac (Federal Home Loan Mortgage Corporation)
Private or conventional loans not held by a federal agency fall outside the CARES Act. If you have a Home Equity Line of Credit (HELOC), separate forbearance rules apply and you should contact your HELOC servicer directly.
Federally Backed vs. Private Loans: CARES Act Coverage
| Loan Type | Backed By | CARES Act Forbearance? | Max Period |
|---|---|---|---|
| FHA Loan | Federal Housing Administration | Yes — automatic right | Up to 360 days |
| VA Loan | Dept. of Veterans Affairs | Yes — automatic right | Up to 360 days |
| USDA Loan | Dept. of Agriculture | Yes — automatic right | Up to 360 days |
| Fannie Mae Loan | Federal Govt (FNMA) | Yes — automatic right | Up to 360 days |
| Freddie Mac Loan | Federal Govt (FHLMC) | Yes — automatic right | Up to 360 days |
| Conventional/Private | Private lender only | No (servicer discretion) | Varies by lender |
| Jumbo Loan | Private lender only | No (servicer discretion) | Varies by lender |
How to Request Forbearance Under the CARES Act
Requesting CARES Act forbearance requires no documentation beyond your hardship statement. Contact your loan servicer — the company you send mortgage payments to, which may differ from your original lender — and follow these steps:
Step 1: Locate your loan servicer. Check your monthly mortgage statement or original loan documents. You can also use the Fannie Mae and Freddie Mac online loan lookup tools or call HUD at 1-800-569-4287.
Step 2: Call your servicer directly. Use the number on your mortgage statement — not a general customer service line.
Step 3: State your hardship. Tell your servicer you are experiencing financial hardship due to the COVID-19 pandemic. Under the CARES Act, no proof documents are required.
Step 4: Get written confirmation. Ask for written confirmation of the start date, duration, and confirmation that no late fees or penalties will be assessed during forbearance.
Step 5: Ask specifically about repayment before agreeing. Understand exactly how you will repay deferred amounts when forbearance ends (see options in the next section).
Step 6: Request an extension if needed. If 180 days is not enough, you have the right to request one additional 180-day extension. No new documentation is required for the extension.
If you are also considering selling as an alternative to forbearance, read our guide on selling your house without a realtor in Lincoln, NE or how the 7 Days Cash home buying process works to understand your options side by side.
How Long Does CARES Act Forbearance Last?
The initial CARES Act forbearance period is up to 180 days. You have the right to request one extension of up to an additional 180 days, bringing the total maximum forbearance period to 360 days — approximately 12 months.
During forbearance, regular interest continues to accrue on your loan. No extra fees or penalties are added, but your loan balance grows as interest builds. This is a critical distinction: the CARES Act pauses your payment obligation, not your interest accrual.
Warning: CARES Act forbearance does NOT stop foreclosure indefinitely. Once the forbearance period ends, you must resume payments or enter a repayment plan. Failing to do either can restart foreclosure proceedings. If you are approaching the end of forbearance with no repayment plan, see our full guide on 7 steps to avoid foreclosure in Lincoln, Nebraska.
If your forbearance period is ending and you cannot resume payments, selling to a cash buyer before foreclosure proceedings begin is often the best way to preserve your equity and protect your credit history.
How Do You Repay a Mortgage Forbearance?
Repayment is the most important — and most misunderstood — aspect of mortgage forbearance. The most common misconception is that you must repay all deferred payments in a lump sum the moment forbearance ends. This is false. Federal guidelines require servicers to offer you sustainable repayment options.
| Repayment Option | How It Works | Best For | Key Risk |
|---|---|---|---|
| Lump Sum Repayment | Pay all deferred payments at once when forbearance ends | Homeowners who saved cash during forbearance | Most borrowers cannot afford this — confirm upfront if servicer will demand it |
| Repayment Plan | Add a portion of deferred payments to each monthly bill until caught up (typically 3-12 months) | Those whose income has partially or fully recovered | Temporarily higher monthly payments |
| Payment Deferral | Move all deferred payments to end of loan term as a non-interest-bearing balloon or extra months | Homeowners whose income has returned to normal | Large balance due at loan payoff or home sale |
| Loan Modification | Permanently modify loan terms — rate, term, or principal — to make payment permanently affordable | Homeowners with permanent income reduction | Requires full underwriting approval; longer process |
If none of these repayment options are workable, selling your house to a cash buyer eliminates the deferred balance entirely. At closing, your mortgage servicer is paid in full from the sale proceeds — including any accrued forbearance balance — and you walk away free of the obligation. Learn how the process works step by step and see how quickly you could close.
Does CARES Act Forbearance Affect Your Credit Score?
Under the CARES Act, if you were current on your mortgage before entering forbearance, your servicer is required to continue reporting your account as current to the credit bureaus throughout the forbearance period. This means a properly executed CARES Act forbearance should not damage your credit score.
However, several important caveats apply:
- If you were already delinquent before requesting forbearance, that delinquency status may continue to be reported during forbearance.
- If you miss payments after the forbearance period ends without entering a repayment plan, those missed payments will be reported as delinquent — and can rapidly damage your score.
- Some servicers have inconsistently applied the credit protection provisions — monitor your credit report monthly and dispute any inaccurate reporting in writing.
- Foreclosure proceedings — which can begin if payments lapse after forbearance — cause severe, long-lasting credit damage.
If you are weighing whether to continue with forbearance or sell, review what reduces home value in Nebraska and how long it takes to sell a house in Nebraska to estimate your net proceeds from a sale and whether they exceed your remaining forbearance obligations.
Private and Conventional Loans: Forbearance Outside the CARES Act
If your mortgage is not government-backed, the CARES Act does not apply. However, many private lenders and servicers created voluntary hardship forbearance programs during COVID-19, and most still offer standard hardship forbearance for non-pandemic reasons (job loss, medical emergency, natural disaster).
For private loans, ask your servicer the following four questions:
- Do you offer a hardship forbearance program, and what qualifies as a hardship?
- What documentation is required to apply?
- How will this be reported to the credit bureaus — as current, deferred, or hardship?
- What repayment options are available at the end of the forbearance period?
Private lenders are not legally required to offer forbearance, so options vary widely. If your private lender offers no workable solution and you are facing potential foreclosure, selling to a cash buyer before the foreclosure process advances is often the fastest way to exit the situation without catastrophic credit damage. You can also explore whether you can sell your house back to the bank through a short sale or deed-in-lieu arrangement.
What Happens When Mortgage Forbearance Ends?
Your servicer is required to contact you before your forbearance period expires to discuss repayment options. Do not wait for them to reach out — contact your servicer proactively at least 30 days before your forbearance end date.
Your five primary paths forward when forbearance ends:
- Enter a repayment plan to pay extra each month until deferred amounts are covered
- Request a payment deferral to move unpaid amounts to the end of your loan term
- Apply for a loan modification to restructure your loan permanently
- Refinance your mortgage (requires adequate credit and equity)
- Sell your home and pay off the mortgage — including deferred balance — from sale proceeds
Homeowners who built equity before the pandemic may find that selling in the current Nebraska market yields enough to pay off the forbearance-deferred balance, cover closing costs, and walk away with remaining equity intact. If this is your first time selling a home, read our step-by-step guide to selling a house in Nebraska for first-time sellers.
Should You Sell Your House Instead of Pursuing Forbearance?
Forbearance is designed for temporary hardship — income disruption you expect to resolve within 12 months. If your financial difficulty is likely to be long-term or permanent, forbearance may only delay an inevitable sale or foreclosure while allowing interest and deferred balances to accumulate.
Consider selling your home if any of the following apply:
- Your income has permanently decreased and no loan modification will make your current payment affordable
- You have built significant equity and selling would let you downsize to a more affordable home or area
- You are approaching the end of your 360-day maximum forbearance period with no repayment plan in place
- You want to eliminate the stress of a deferred debt growing on your loan balance
- You are moving out of state or downsizing regardless of the financial pressure
7 Days Cash by The Sierra Group, LLC has been buying homes directly from homeowners for over 25 years. We are a veteran-owned, A+ BBB-rated company based in Lincoln, Nebraska. We buy homes in ANY condition — no repairs required — with no agent commissions, no seller-side closing fees, and no obligation. We close in as few as 3 days, on your timeline.
Read reviews from homeowners who sold to 7 Days Cash, or compare what you would net selling to a cash buyer versus listing with a realtor. Most sellers are surprised to find that eliminating commissions and repairs often means more net cash from a direct sale.
You can also review what paperwork you need to sell a house in Nebraska, explore whether you need a lawyer for a cash home sale, or check if downsizing in Lincoln, NE makes sense for your situation.
Frequently Asked Questions: CARES Act Mortgage Forbearance
Q: Does CARES Act forbearance apply to all mortgages?
No. The CARES Act covers only federally backed mortgages: FHA, VA, USDA, Fannie Mae, and Freddie Mac loans. Private or conventional loans held by private lenders are not covered, though many private servicers offered their own voluntary forbearance programs during the pandemic.
Q: Does mortgage forbearance hurt your credit score?
If you were current before entering forbearance, the CARES Act requires servicers to report your account as current throughout the forbearance period. This protects your credit. However, missed payments after forbearance ends — without an active repayment plan — will be reported as delinquent and can significantly damage your credit score.
Q: Do I have to repay everything in a lump sum when forbearance ends?
No — this is the most common misconception. You are not required to repay everything at once. You can request a repayment plan that spreads deferred payments over several months, a payment deferral that moves them to the end of the loan term, or a loan modification that permanently adjusts your loan terms to an affordable level.
Q: How do I find out who my loan servicer is?
Your servicer is listed on your monthly mortgage statement. If you are unsure, check the Fannie Mae or Freddie Mac online loan lookup tools. You can also call the HUD housing counseling line at 1-800-569-4287 for a referral to a free HUD-approved housing counselor who can identify your servicer and help you navigate forbearance options.
Q: Can I sell my house while in forbearance?
Yes. Being in forbearance does not prevent you from selling. At closing, your mortgage servicer receives full payoff from the sale proceeds, including any deferred balance. If you owe more than the home is worth, you may need to negotiate a short sale. Learn how the 7 Days Cash process works if you want to sell quickly without listing on the MLS.
Q: What if I cannot afford my mortgage even after forbearance ends?
If income has not recovered enough to resume payments, your options are: apply for a permanent loan modification, pursue a short sale, complete a deed-in-lieu of foreclosure with your servicer, or sell your home to a cash buyer before foreclosure proceedings begin. Selling proactively preserves more equity and causes far less credit damage than a completed foreclosure. See our full guide: 7 steps to avoid foreclosure in Lincoln, Nebraska.
Q: Is CARES Act forbearance still available in 2026?
The original COVID-19 CARES Act forbearance provisions ended when the national emergency concluded in 2023. New COVID-19 specific forbearance requests are no longer accepted. However, most servicers still offer standard hardship forbearance programs for other qualifying hardships (job loss, medical emergency, natural disaster). Contact your servicer to ask about current options. If you need to move quickly, get a no-obligation cash offer from 7 Days Cash — we can close in as few as 3 days regardless of your forbearance status.
Q: Can I keep my home after a CARES Act forbearance?
Yes, if you can resume regular payments after forbearance and enter an approved repayment arrangement. Many homeowners successfully used CARES Act forbearance as a temporary bridge and kept their homes. If keeping the home long-term is not financially viable, downsizing to a more affordable property in Nebraska or selling and moving to a lower-cost area are practical next steps.
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7 Days Cash by The Sierra Group, LLC is based in Lincoln, Nebraska. We purchase homes locally, and in many other parts of the country such as Nebraska, Iowa, Missouri, Kansas & Florida! For the past 20 years, we have been helping people by purchasing their homes directly! In addition, we are licensed realtors in Nebraska and Missouri. We understand the process and the local markets, allowing you to receive the best service and the best all-cash price for your home! We are Veteran Owned, and hold an A+ rating with The BBB!
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