Did COVID make it hard to make your mortgage payments? Did you request relief through forbearance?
GOOD NEWS IS that help is still available, call your servicer, ask about their options. Forbearance opportunity was presented under the CARES Act with the opportunity to get 180 days of forbearance and an extension for up to another 180 days.
The missed payments will have to be repaid, how that happens is up to your loan servicer. When asking for assistance be sure to understand how and when it is to be repaid, or you could find yourself facing foreclosure.
Under the CARES act you do not have to prove your hardship, you just simply need to ask. If you receive an offer of help in the mail or as a phone solicitation asking for an upfront fee, it is a scam, hang up and report it to your lender.
WHAT HAPPENS WHEN MY FORBEARANCE ENDS? This depends on your loan servicer and the agreement you made with them, generally the options are:
REINSTATEMENT – this is a lump sum pay back of all the payments missed, plus interest and any fees
REPAYMANT PLAN – this is done by taking the total payments missed, plus interest and fees and dividing it over 12 equal payments and added to your current payment
MORTGAGE MODIFICATION – this is a complete restructure of your loan adding the missed payments to your mortgage balance and creating a new payment going forward, it can also add more months to your loan.
The Consumer Financial Protection Bureau (CFPB) provides details on forbearance payments depending on the different types of federally backed loans, but it still may not apply to all borrowers. Here are the basics:
|Fannie Mae/Freddie Mac||FHA||VA||USDA|
|Up to 12 months after forbearance ends to repay||Give a payment plan to repay the past due amount within 6 months of the forbearance ending||Give a payment plan to repay the past due amount within 6 months of the forbearance ending||Give a payment plan to repay the past due amount within 6 months of the forbearance ending|
|Extend the mortgage by the number of months in forbearance||Extend the mortgage to 30 years, adding the past due balance to the loan||Extend the mortgage to 30 years, adding the past due balance to the loan||Extend the mortgage to 30 years, adding the past due balance to the loan in an attempt to keep the payment where they were or lower|
|Add past due amounts to the loan balance and extend the term by an amount that keeps payments the dame as they were before||Add a balloon payment to the end of the loan for the amount past due plus interest and fees||Extend the loan term up to 30 years to keep borrowers payment no more than 31% of borrowers income||Add a balloon payment to the end of the loan for the amount past due plus interest and fees|
|Add past due amounts to the loan balance and extend the mortgage to 40 years|
Private lenders are not required to provide relief so you your loan is with a private lender, we encourage you to check with them to determine whether relief is available to you.
If you are out of forbearance and finding that none of the available solutions help you and you are at risk of foreclosure, give us a call. You likely have enough equity in your home to sell it and use your equity for a fresh start.