04/03/2020
What to Do If You Can’t Make a Mortgage Payment
If you’re a Mortgage customer and the pandemic has caused a significant loss of income that will prevent you from making payments here is some info for you.
Short-term relief is sometimes available. If you are experiencing a financial crisis due to the pandemic, you may have the option to temporarily pause your mortgage payments. This is called a forbearance, and it usually has no impact to your credit.
While forbearance may be a great option to help you through this crisis, remember, once your forbearance is over, any paused payments will need to be repaid. Banks may work with you to find a payment solution that works for you, but it’s best to save this option until you need it most.
Remember, if your payment is due at the beginning of the month, you have time. You can begin the process online by asking your bank for an application and filling out a Pandemic Forbearance Plan Request. If possible it’s best to continue making your mortgage payment and apply for forbearance when you need it.
Is forbearance the right option for you? Forbearance due to the COVID-19 pandemic may be available to you in the following situations:
You have lost work due to the pandemic.
You are sick and can’t work.
You are caring for a sick family member and therefore can’t work.
You have experienced a significant decline in income due to the pandemic.
If you qualify for a forbearance, you’ll be able to pause your mortgage payments for an initial period of three months. If you get to the end of your forbearance period and can’t bring your balance current, you can extend the forbearance period in three month increments, up to 12 months total. After your forbearance plan ends, banks MAY work with you to reevaluate your situation and figure out what’s next but there are no guarantees.
What happens after a forbearance? At the end of your forbearance period, all payments not made during the forbearance period will have to be paid back. Banks realize this will probably be a big financial burden, which is why they may offer you a few options for how to handle it:
Start a repayment plan — Over a set number of months, an extra amount will be added to your regular mortgage payment to cover the amount you owe from the forbearance.
Pay it as a lump sum — If possible, the simplest option is to pay back the amount owed as a lump sum and pay off the amount you owe at one time.
Loan modification — If you are unable to pay a lump sum or enter into a repayment plan, we will work with you on a loan modification. This may include an extension at the end of your loan giving you additional months to pay the forbearance amount.
Note: Please don’t stop making your mortgage payments until you’ve been approved for a forbearance plan. These programs are not payment forgiveness programs. They’ll require any paused payments to be repaid, so save these options for when you need them most.
Why Forbearance and Not Payment Forgiveness
We know that some announcements in the news may have led you to believe that your mortgage company can waive your upcoming payments or offer payment forgiveness. To understand why they usually can’t offer that, it’s helpful to understand a little bit about their role in the mortgage industry.
As a mortgage servicer, many mortgage collectors simply collect payments on behalf of major mortgage investors like Fannie Mae, Freddie Mac, FHA, VA, USDA, and others. In times of crisis, like the one we’re in now, they are contractually obligated to continue making payments to these investors, even if homeowners are unable to pay their mortgage. During this pandemic, the major mortgage investors are offering forbearance as an immediate relief option for homeowners who need assistance.
Right now, banks are working closely with these agencies, as well as Congress and other federal authorities, to urge them to make the best programs available for homeowners like you.
We will try to keep you updated with any new information we come across.
In the mean time if you need help or have questions give me a call, text or email.
Best regards,
Chuck Lindberg
508-922-7653
[email protected]
