April 17th, 2023 3:34 PM by Sam Kader MLO130505
Homeowners planning to exit forbearance as well as those not in forbearance but have missed payments should contact their mortgage servicers soon and inquire about their options before the federal foreclosure moratorium expires on June 30th 2021. About 70% of borrowers with federally backed home loans were eligible to suspend mortgage payments for up to a year as part of the first pandemic relief act passed by congress in March 2020 (it was later extended through September 2021). While homeowners have been able to skip their mortgage payments for the past 14 months, I don't think it will create a massive foreclosure activity when the moratorium expires due to current housing boom, increase in home equity and property appreciation. In fact, this might create listing opportunity for agents.
Though details on forbearance options may differ depending on which entity backs the loan, borrowers generally will be asked if they can step up to one of these options:
1. Can you repay the missed mortgage payments in a lump-sum?
. If not, can you repay it in a monthly installments over the next year or so?
. If not, can you resume paying the same amount you were paying before the pandemic?
. If yes, you can defer those missed payments to the end of the loan either by extending the loan by the number of missed months or by making the sum at the missed payments due at the end of the loan. This is called a deferral.
. If you are unable to pay the same amount, you can qualify for the last option which is a loan modification. This will will lower your rates by reducing the interest rate and/or extending the length of the loan.
Borrowers whose loans are not backed by Fannie or Freddie should seek help from a free housing counselor certified by the U.S. Department of Housing and Urban Development or a private attorney if their servicer refuses to respond or provide affordable options. To file a complaint about your mortgage servicer, go to the CFPB’s website at consumerfinance.gov/complaint. To determine who owns your mortgage - please visit CFPB website here.
Forbearance under this plan will not affect credit ratings or credit scores. However, homeowners must be out of forbearance for at least 3 months and must be making agreed upon mortgage payments for at least 3 months in order to be eligible for conventional refinancing and to take advantage of current low interest rates.