Key Highlights

  • This Part II of the two-part series on Mortgage Forbearance focuses on what happens after forbearance or post-forbearance options
  • There are two critical pieces of information to remember in this post
    • Deferred or delinquent mortgage payments do NOT have to be paid in one lump sum at the end of forbearance!
    • Talk with and ask your lender (mortgage services) about any options or programs or plans that might be most appropriate for you!

To refresh your knowledge about mortgage forbearance, read and offer your clients the information presented in Part I of this two-part series that discusses the elements of mortgage forbearance. Also feel free to offer your clients the information presented in this post about post-forbearance options. These turbulent times have overwhelmed the best of us…clear information about anxiety producing topics such as mortgage forbearance can (sometimes) have a calming, reassuring effect.

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Post-Forbearance Options

 

  1. There are several options of making your mortgage current once your forbearance period ends:
    1. You (the borrower) can reinstate or restore your delinquent mortgage to its current status prior to forbearance in one lump sum BUT THIS IS NOT REQUIRED.
    2. You can develop a repayment plan with your lender (servicer) to pay your regular monthly payments PLUS an additional agreed upon amount to repay the delinquency over a specific period of time.
    3. You can develop a repayment plan with your lender (servicer) to pay your regular monthly mortgage payments and wait to pay the payments you deferred or missed UNTIL THE END OF THE LOAN. This called payment deferral. (See the above #5.)
    4. You can develop a repayment plan with your lender (servicer) by revising or modifying your original loan. This is called loan modification. For example, you can modify the term of your loan by extending it from 10 years to 15 or 20 years.
      1. Freddie Mac has a Freddie Mac Flex Modification program that may target a 20% payment reduction and extend the mortgage term to 40 years, may reduce an existing rate, and may create a forborne balance,
    5. Your lender (servicer) may have other options. Ask!
  2. It is possible to do a partial reinstatement with your repayment plan after you forbearance period ends.
  3. If your financial hardships caused by COVID make it impossible for you to continue affording homeownership, talk with your lender (servicer). A short sale or deed-in lieu may make more sense and less costly to you than foreclosure.
  4. Even if you have already had a loan modification on your mortgage, you may be eligible for another one. Your lender (servicer) is able to confirm your eligibility. Ask!

 

 

Thanks to both Freddie Mac and HousingWire.

Also read: Consumer Sentiment in Housing Market Bounced Up in June, No Servicer Liquidity Coming But GSEs May Instigate Servicing Transfers, Mortgage Forbearance Numbers Increase to 4.2M