fbpx
Mortgage Forbearance
Some homeowners who could not afford to make their mortgage payments this past year have been relieved to find out that their mortgage servicer or lender allowed them to pause or possibly, reduce their payments for a limited period. While it does relieve the financial pressure, it is a temporary remedy. About 2/3 of the […]
Mortgage Forbearance
Some homeowners who could not afford to make their mortgage payments this past year have been relieved to find out that their mortgage servicer or lender allowed them to pause or possibly, reduce their payments for a limited period. While it does relieve the financial pressure, it is a temporary remedy. About 2/3 of the […]

CKgU79VtoECqF1ELOU2OSQ.jpg

Some homeowners who could not afford to make their mortgage payments this past year have been relieved to find out that their mortgage servicer or lender allowed them to pause or possibly, reduce their payments for a limited period. While it does relieve the financial pressure, it is a temporary remedy.

About 2/3 of the people who entered forbearance during the pandemic have exited the program. There are only a little over two million homeowners remaining in forbearance.

It is important for owners who find that they cannot make the payments on their mortgage to contact their lender and request a forbearance. If you stop making mortgage payments without a forbearance agreement, the servicer will report this information to the credit reporting companies, and it can have a lasting negative impact on your credit history. Without going through that process, the lender assumes you are delinquent, and protections afforded under forbearance may not apply.

Forbearance does not forgive the money that is owed. The borrower must repay any missed or reduced payments in the future. If forbearance was issued under the CARES Act, the lender cannot require payment in full at the end of the forbearance. Additionally, Fannie Mae has declared “following forbearance, you are not required to repay missed payments all at once, but you have that option.”

The forbearance agreement issued by the lender allows a borrower to avoid foreclosure for a period until, hopefully, the borrower’s financial situation improves. If at the end of the stated period, the borrower’s hardship still exists, the lender may be able to extend the time frame.

The provisions of the forbearance vary based on the type of mortgage. The lender can tell you the specific provisions and options.

Loans made by Fannie Mae and Freddie Mac require lenders to suspend reports to credit bureaus of past due payments for borrowers in a forbearance plan and no penalties or late fees will be assessed. Furthermore, the lender is mandated to “work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification.”

At the end of the forbearance, there can be several options available to repay the suspended or paused amounts. You can resume your normal payment and repayment plan can be established. If you can start making the payment but can’t afford additional payments, the missed payments could be added to the end of the loan or possibly, a secondary lien that is due and payable when you refinance, sell or terminate your mortgage.

In cases where the borrower can’t afford to make the regular payments, a loan modification may be available with lower payments, but the term would be extended. While the CARES Act does not require borrowers at the end of the forbearance period to repay skipped payments in a lump sum, if a borrower is able, they may do so.

The purpose of this is to re-establish a payment plan that the borrower can repay the money owed. To be eligible for a loan modification, borrowers must show they cannot make the current mortgage payments because of financial hardship while demonstrating they can meet their obligations with the proposed restructured terms.

Under the CARES Act, borrowers with a GSE-backed mortgage are entitled to an additional 180-day extension which would be a total of 360 days. It is necessary to contact the servicer/lender for the extension.

There can be both legal and tax issues concerning in forbearance and professional advice is recommended. A list of U.S. Department of Housing and Urban Development approved Counseling agencies are available.

LIST OF BLOGS

Awareness is Key to Safeguarding Against Scams

When it comes to safeguarding against scams, awareness is key. By being vigilant and recognizing consistent red flags, you can effectively thwart scammers in their tracks. Stay one step ahead and keep an eye out for these warning signs to protect yourself from falling...

How to Buy Your First Home as an Investment and Retire Rich

As young people enter the full-time workforce and begin to think about living on their own, it may not seem practical or wise to consider buying a home. However, it may be a pivotal decision for your financial security and future retirement. Rents are going to...

Who is the best at selling Luxury Real Estate?

Who is the best at selling Luxury Real Estate?  Here is the quintessential guide: Mastering the Art of Luxury Home Sales: A Comprehensive Guide... Selling a Luxury Home: What You Need to Know When it comes to selling luxury real estate, precision and finesse are...

Negotiate with the Seller Like a PRO

Having a negotiation plan is paramount when it comes to navigating the complex world of real estate as a homebuyer. It's no secret that buying a home involves a significant financial investment and numerous variables that can impact the outcome of the transaction. By...

Evaluate Your Mortgage Loan Types

Making an informed decision about securing a mortgage loan is vital, as it involves understanding the available options and considering relevant factors. With a range of mortgage types designed to cater to diverse needs, it is essential to carefully evaluate your...

Proven techniques to shorten your market time

Are you in a hurry to sell your house? Whether it's due to relocation or a desire to streamline the selling process, selling your home quickly doesn't have to be a daunting task. With extensive experience in assisting homeowners, our expert team has identified three...

Tips to Achieve Your Full Potential Equity

The real estate market is constantly evolving, presenting homeowners with challenges in determining the accurate value of their properties. In today's era of rapid fluctuations, it is essential to equip yourself with the right knowledge and tools to make informed...

How Appreciation and Amortization Benefit Homeowners

Owning a home is not only a place to live but also a valuable asset that can contribute to long-term wealth accumulation. Two key factors that play a vital role in increasing a homeowner's wealth are appreciation and amortization. Understanding how these factors work...

RECENT POSTS

ABOUT  TWENTY
THREE HOMES

The Twenty Three Homes are one of the premiere real estate groups locally, nationally and internationally, specifically dealing with high-end properties and exclusive clientele. Partner with Keller Williams Twenty Three Homes are full service real estate experts whose clients benefit from the custom tailored, hands on service while receiving all the exclusive amenities and resources of one of the most established and respected firms in the business.

GET IN TOUCH