Forbearance

Dated: June 11 2020

Views: 7

If you're behind on your mortgage payment or expect to be in the upcoming months due to COVID-19, I have some information to help keep you out of foreclosure.

 

Like so many people have, if you're experiencing financial hardship due to COVID-19 and you find yourself unable to pay your mortgage, don't panic, take a big breath because there may be options available to you to keep you out of foreclosure. If you're not aware, back in March, the C.A.R.E.S Act was passed and this is specifically designed to help homeowners who are experiencing temporary financial hardship and who have a federally backed mortgage to temporarily either delay or reduce their mortgage payments for up to a year.

 

Forbearance typically offers the homeowner two options. You can either reduce your payments or they can be temporarily suspended altogether. But during this time, the lender agrees not to foreclose on your home and generally, it's not reported negatively on your credit report.

 

If you're considering a mortgage forbearance, just a couple of things to keep in mind under the C.A.R.E.S Act. Any federally backed loan VA, FHA, USDA, Freddie Mac, Fannie Mae, you are entitled to a 180 day forbearance period. If at the end of that six months, you're still experiencing financial hardship, you're entitled to request an additional 180 day forbearance period. Keep in mind you're not going to accrue any additional interest charges, penalties, or interest fees however, you are still responsible for the monthly interest that is accruing in addition to any homeowner's insurance and property taxes that may be wrapped up into your monthly payment. And also it's another good thing to note, the minute you feel you might need a mortgage forbearance, pick up the phone, call your lender and find out which options work best for you.

 

Once you've talked to and worked out with your lender the agreement, it will typically outline all of your obligations, including going back to a normal, full mortgage payment at the end of the forbearance period. Keep in mind this is not a forgiveness of debt it's simply a deferment of debt in lieu of foreclosure so that you have time to get back on your feet and financially stable to make your monthly mortgage payments.

 

And according to Fannie Mae, “homeowners at the end of the forbearance period should be offered different options for making up the payments and not just presented with the option to pay everything back in one lump sum payment.”

 

You may be asking what if I don't have a federally backed mortgage? Well, unfortunately, you're not protected by the C.A.R.E.S Act. However, I would definitely suggest reaching out to your mortgage lender and finding out if they have forbearance, what options are available to you, and what repayment plans do they have.

 

To get started, reach out to your loan servicer and let them know immediately what's going on and find out what are the options that they have for forbearance or hardship and make sure you reach out right away as soon as you know you won't be able to make a payment that way you can avoid any missed payments showing up on your credit report.

 

Keep in mind that the guidelines and rules will vary from lender to lender and unfortunately they are not obligated to approve your request. So if you feel like you're running out of options, you can always reach out to a government-approved housing counselor to figure out your best path moving forward.

 

Here are some of the questions that you should be asking if you're filing for forbearance. One, can the term of the loan be extended so that you can even have consideration or an option to put the missed payments on the back end of the loan. If that is an option, then your next question is, can you do that? Can you actually just take the missed payments and tack them onto the back of the loan? Or is your lender going to require that you make the missed payments in one lump sum payment at the end of the forbearance period? Maybe you don't want to make one lump sum payment at the end of their forbearance period. I mean, if you're already having trouble making the payments month to month, how in the world are you going to catch up after six months or a year even?

 

Perhaps you don't want to tack those on to the back end of the mortgage either. Reach out to your mortgage company or your mortgage servicer and find out if you can make increased monthly payments and keep it going that way until you've satisfied the deferment amount. And the final tip to keep your situation from going from bad to worse, make sure to avoid any contact with third parties who may be reaching out to you about forbearance. The best way to handle this situation is to pick up the phone, call your service lender directly and make the arrangements with them.

I know there are a lot of questions about forbearance right now so hopefully, this was able to answer a little bit of that for you. If you have more specific questions or need the latest information, please make sure you reach out to your lender. I'm a real estate agent, not a lender, so as much as I pride myself on giving you accurate information, you want to make sure that you talk to the experts on this one. So if you don't have your own personal mortgage lender to reach out to, I will include a link in the Youtube video description and you can reach out to our friends and partners over at Southeast Mortgage and they will answer all of your questions about forbearance.

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Misty Harris

Meet Misty Harris - a U.S Army Veteran and licensed professional REALTOR with JP & Associates Realtors Metro Atlanta. Misty has always been passionate about real estate. It began with her admiration ....

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