As we know, the forbearance on foreclosures has been extended until June 30, 2021! Though this break from paying mortgages and other loans have been a sigh of relief to so many, it has also been the cause of great concern.
What will happen once the forbearance has reached its due date?
Will there be mass foreclosures come July?
Mortgage forbearance is something so many people across the world are learning about for the very first time, as COVID-19 has caused millions to lose their jobs and their main sources of income, forcing them to seek relief from lenders during this difficult time.
According to the Coronavirus Aid, Relief and Economic Security (CARES) Act, lenders and servicers accountable for federally backed mortgages are obligated to provide homeowners payment forbearance. These include loans granted by the VA, FHA, USDA and mortgages owned by Fannie Mae or Freddie Mac.
What about those with mortgages not backed by the federal government?
These homeowners have no need for concern, as they do also qualify for mortgage forbearance under relief plans provided by their respective lenders. In this case, it is important to contact your servicer as soon as possible to discuss your options.
The terms and options regarding mortgage forbearance will typically vary, but all of them expect the borrower to ultimately pay back the full amount of what they were exempted from during this period.
Many of you might be understandably nervous and concerned about a few things…
Will I have to pay it all back once the forbearance period ends?
Will interest have accrued on top of the sum owed?
What if I am unable to pay it all back immediately? Will I lose my house?
Post Forbearance Options
Rest assured that federally backed loan servicers, under the CARES Act, are not allowed to charge you extra interest on the payments missed during this forbearance period. They will also be prohibited from requiring you to pay it all back at once!
Borrowers’ options available to them will be different with each lender. Click here for more information regarding forbearance repayment plans for all the federally backed loans, provided by the U.S. Consumer Financial Protection Bureau (CFPB).
Servicers and lenders of mortgages that are not federally backed, on the other hand, are not included under the CARES Act, but they have been urged to be accommodating in handling borrowers that have been affected by the pandemic.
We strongly urge all homeowners to contact your loan servicer personally, so as to ascertain what your terms and options are regarding your particular situation!
We are also here to listen and offer advice, no matter your story, leave us a comment below or contact us directly!