Shawnee Board of Realtors: 6 things to know about mortgage forbearance
As part of the CARES Act, many homeowners are eligible to place their mortgage into forbearance and receive temporary relief from their monthly mortgage payment.
Here are some things that the SHAWNEE BOARD of REALTORS® wants you to know.
1. WHAT IS FORBEARANCE?
A process that allows for a short term pause or possible reduction in mortgage payments if you have been negatively affected by COVID-19. Normal forbearance term is from 3 to 6 months with the possibility of extending up to 12 months.
2. WHO IS ELIGIBLE
Almost anyone who has a HUD, FHA, USDA, VA , Fannie Mae or Freddie Mac or other Federally backed loan. Many loans that are not Federally backed also qualify.
3. FORBEARANCE IS NOT FORGIVENESS
All missed payments must be made up at some point, however they will not be required to make up the payments in a lump sum and should be allowed to be made up over time or possibly added to the end of your loan. If you sell your home or refinance then the missed payments will be added to the payoff. This is something that you should clearly understand before entering into forbearance.
4. WHERE DO I START? IS THERE A COST?
There are no fees allowed for forbearance. If you are having difficulty making your payments and have a Federally backed loan, then contact your loan servicer to apply. If your loan is not federally backed then contact your lender directly and let them know that you have been affected by COVID-19 and are seeking forbearance.
If you are asked to pay a fee, do not fall for it! It is a scam!
5. ARE THERE ANY DRAWBACKS?
If you can continue making your payments then you should certainly do so. It is not free money and you are only pushing back the inevitable. We have heard of instances where credit bureaus were reporting payments missed through forbearance as late payments and caused borrowers credit scores to be impacted in a very negative way. This should not be happening but can be difficult to iron out.
6. FORBEARANCE IS NOT GIVEN AUTOMATICALLY
If you are unable to make payments due to a COVID-19 related reason, reach out to your lender and let them know. They will have resources and information for your specific situation. Do not just stop making payments! If not done properly your credit could possibly be affected.
For the most current information, resources and guidelines, check out the following website: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/