Here’s some information and tips about the mortgage forbearance situation.

Forbearance is defined as a temporary postponement or reduction of mortgage payments, not payment forgiveness. Even if you didn’t participate in the Cares Act of 2020 or mortgage forbearance, you may know someone who did, so pass this message on to them. 

During the pandemic, many homeowners could pause or reduce their mortgage payments for a while if they were struggling financially. There are approximately 2.3 million loans currently in forbearance. The Cares Act doesn’t erase the amount the homeowner owes on their mortgage; it must be repaid, but not always all at once. 

Depending on which type of loan you have, your repayment options will vary. Sometimes payments can be deferred to the end of your loan term, and any deferment would need to be repaid before the home is sold or refinanced. Other options include loan modification, repayment, or reinstatement, and you might even be able to extend the expiration date if needed. 

“There are approximately 2.3 million loans currently in forbearance.”

For mortgages backed by HUD, FHA, USDA, and VA, the deadline is June 30, 2021. Freddie Mac and Fannie Mae have not yet released their deadline date for the mortgages they back. We recommend anyone who is in mortgage forbearance to contact their lender to ensure they understand the terms of their repayment. As long as your initial forbearance was under the Cares Act, your loan servicer cannot ask you to pay all the missed payments at once. 

Here are five tips to help you with forbearance:

1. Keep an eye on your credit report. Sometimes mistakes or issues can crop up. 

2. You can end forbearance early. You can end your forbearance period early and work through your repayment plan with your lender. You don’t have to wait for that six- or 12-month period to end.

3. Lenders have loosened requirements. Lenders have loosened their requirements to qualify for a new home purchase with a COVID-related forbearance should you decide to sell and purchase again. However, you would need to meet a few guidelines, so check with a lender for details.

4. You can sell. If you’re still unable to make your payments after your forbearance period has ended, you have the option to sell your home. Foreclosure, short sale, or deed in lieu could be necessary if you owe more than what the property is worth. For more details, you can also go to the Consumer Financial Protection Bureau (CFPB) website for tools and resources. 

5. Know your home’s value. It’s essential to know your home’s value so you know what your options are.

We understand how emotional and stressful this situation can be. Call, text, or email us if you have questions or need help. There’s no judgment, and our conversation will remain anonymous. We’re here to assist you.