These are trying times with many Americans facing illness, mental and emotional fears topped off with financial pressures. It is important to have a clear understanding about Mortgage Forbearance before making decisions.
Mortgage Forbearance IS NOT Forgiveness
The Care Act has been passed by the government to all for “Federally Backed Mortgages” to request a forbearance on their mortgage payments for up to 6 months, depending on the individual situation. So what is a forbearance? A forbearance is an agreement with your mortgage servicer to reduce or delay regular payments for a set period of time. When the forbearance period ends payments will be due as agreed upon in the forbearance agreement.
For those in a position where you have no ability to pay your mortgage a mortgage forbearance could be exactly what you need to keep your home and manage through this crisis. It is imperative to explore ALL other alternatives as this IS NOT a handout from the federal government.
The process for which forbear mortgage payments will be made up is going to depend upon the mortgage servicer and their policies. In some instances once the 6 months are up the next payment will be due as usual as well as ALL 6 payments that were put into the Forbearance.
If you are in a situation where payments will be missed and need help, contact your mortgage servicer because you must request forbearance; it is not automatic. Make sure to do the following:
- GET EVERYTHING IN WRITING- Services will have some form of their policy that can be emailed to you direct or through their online portal. Read this in it’s entirety, understand it and keep a copy.
- SEEK TO UNDERSTAND & BE PATIENT- You may need to make multiple calls and remain on long holds but you need to have a clear understanding of all your options. If you call get someone who is not helpful, call back until you do.
- KNOW IF THERE ARE OTHER OPTIONS BEFORE FORBEARING PAYMENTS- The most important thing you need to understand are what your options are at the END of the forbearance. Can payments be added to your principal balance? Is a loan modification possible, if so what does that look like? How will the forbearance be reported to the credit bureaus? Will there be a lump sum required to pay back the forbear payments? How long can you extend the forbearance period?
- SEEK OUT A LOCAL HUD APPROVED HOUSING COUNSELOR- These counselors are here to help you navigate some of the tough choices that may lay ahead. This link will assist you in finding a local counselor near you: HUD APPROVED COUNSELOR
- TALK TO A TRUSTED MORTGAGE ADVISER- This is what we are here for! Let us know what you are dealing with and we will help to trouble shoot your situation and provide the best advice on next steps. We are all in this together and as a lending community we want what is best for you as a homeowner. Calling us won’t cost you anything and our guidance is always provided as though you are out family. This is the least we can do during these trying times.
An IMPORTANT Note if you enter into a Forbearance:
- You will want to monitor our credit report to catch any potential errors as changes in forbearance reporting may not be seamless with the credit bureaus. While in forbearance your credit should not be negatively impacted.
Other Great Resources:
Q&A Resource from the US House Committee