What Happens After a COVID Mortgage Forbearance?
Learn the Options for Paying Back Missed and Reduced Payments
Who qualifies for COVID mortgage forbearance? According to information from the Consumer Financial Protection Bureau, you may have the right to forbearance if you:
- Experienced financial hardship directly or indirectly because of the pandemic
- Have a federally backed loan, including HUD/FHA, VA, USDA, Fannie Mae, and Freddie Mac loans.
Even if your loan isn’t federally backed, your lender may offer mortgage forbearance because of the coronavirus. You can contact your lender to find out what options are available to you as, by law, they must inform you about payment relief options if you are having trouble making mortgage payments.
Options for Paying Back Missed Mortgage Payment
When your forbearance period ends, you’ll have to pay back what you owe. Your lender may contact you before your forbearance period runs out to discuss your options. But if they don’t, don’t hesitate to contact them as you get close to your forbearance exit date so you will know what to expect. There are several possible options you may have, depending on whether your loan is federally backed or not and who your lender and loan servicer are.
COVID Deferred Mortgage Payment
If your home loan is federally backed by Fannie Mae or Freddie Mac, you may be eligible for a COVID-19 Payment Deferral or a similar repayment plan, depending on your lender. How this works is that once forbearance on your loan ends, you return to making your regular mortgage payments in the same amount and with the same interest rate that you had pre-forbearance. The mortgage payments you missed are added on to the end of your loan term, so you pay back the money when you refinance your loan, sell your home, or pay off your mortgage. A COVID deferred mortgage payment option may work for people who are in a financial situation to resume their regular monthly mortgage payments but can’t add additional money to those payments.
In a repayment plan, you add a specific amount of additional money to your regular monthly mortgage payments to pay back what you owe. Repayment plans are calculated for set time periods. Once the money you owe is paid back over months, or a year, or whatever time period is agreed upon, your monthly payments return to normal. Before signing anything when it comes to a repayment plan, be sure you can afford the extra money each month that you’ll be required to pay.
Loan Modification after COVID Forbearance
With the havoc caused by the pandemic, some people will not be able to afford to resume their regular mortgage payments, let alone agree to a repayment plan that requires them to pay even more money each month. If your forbearance has run out and you aren’t eligible for an extension, you may qualify for a loan modification after the COVID forbearance ends. In a loan modification, your mortgage loan is restructured to reduce monthly payments and make them more affordable; the length of your loan, your interest rate or other terms may change to accommodate your reduced monthly payments.
The good news is that federally backed mortgage lenders cannot require missed and reduced payments to be repaid in a lump sum following forbearance. However, non-federally backed lenders may.
What a lump-sum payment means is that you will be expected to pay your regular mortgage payment for the month plus the total of everything you owe due to forbearance, in a single payment. For people who have that much money on hand, a lump sum can be a quick way to repay missed payments and have forbearance behind them. But most people who suffered financial difficulties during COVID probably don’t have the resources to make lump-sum payments.
If you don’t have a federally backed mortgage and your lender is trying to get you to repay in a lump sum, talk to your lender about other options. If they are unwilling to work with you, consider contacting a real estate attorney for advice. An experienced attorney may be able to help you negotiate a more financially viable option with your mortgage lender.
When Does COVID Mortgage Forbearance End?
When COVID mortgage forbearance ends, will be different for every situation. The current deadline to request initial forbearance for federally backed loans is September 30, 2021. You may be entitled to up to 12 months of forbearance, depending on your lender and situation. If you had already received your initial forbearance before certain timeframes, you may qualify for a maximum of 18 months. When COVID forbearance ends with a non-federally backed lender depends on your individual agreement with your lender. You can learn more about the current federal programs to protect homeowners facing financial hardship due to COVID here.
If your mortgage forbearance is coming to an end and you are unsure of options for your situation, or if you are not sure how you will repay the money from your skipped or reduced payments, it’s a good idea to speak with a Florida real estate and loan modification attorney. An attorney can help you by communicating with your lender to reach a payment solution you can afford. Attorney, Carlos M. Amor, has extensive experience helping people who have fallen on hard times during the pandemic and are having difficulty making mortgage payments.
Contact Attorney Carlos M. Amor for a Free Consultation
No matter what your situation is after COVID mortgage forbearance, attorney Carlos M. Amor may be able to help you negotiate a solution to paying back money you owe and keeping your home. Call our law firm today at (954) 453-7200 to schedule a time to speak with us. Attorney Carlos M. Amor offers free consultations, by phone, via video meeting or in person.