Forbearance is the process of delaying mortgage payments for a given period of time. Homeowners who have failed to take advantage of pandemic-related mortgage assistance may be at risk of losing their properties. Borrowers must initiate outreach for the help, for which they are not required to prove hardship under federal rules. A little more than a million owners nationwide are at least 30-days past due on their mortgage payments and haven’t entered a forbearance program or engaged their lender about some other financial solution, according to an analysis from Black Knight, a mortgage data firm.
About 680,000 of those homeowners have federally guaranteed mortgages and are eligible for a forbearance program to put their monthly payments on hold for up to a year without facing a penalty. These borrowers can skip monthly payments for as long as a year without penalty and make them up later. Many other lenders also are offering help to borrowers who don’t have a federally guaranteed mortgage.
The National Association of REALTORS® has produced brochures that real estate professionals can share with at-risk homeowners about accessing mortgage forbearance options during this period. The first brochure—currently available at www.homeownershipmatters.realtor—is called “Protect Your Investment.” It is available in English and Spanish and outlines what homeowners should ask lenders about their options and payback when weighing forbearance.
More than half of borrowers surveyed by the National Housing Resource Center in July say they were not aware of the forbearance program or did not know how it works. Of consumers confused about their options, nearly 70% say they fear being required to make a large lump-sum payment at the end of their forbearance period. The Federal Housing Finance Agency has clarified that it would not require homeowners who take mortgage forbearance to make up all missed payments in one lump sum. A payment plan could be worked out with the servicer. The CARES Act specifies that when a borrower arranges a forbearance option with their lender on an FHFA, Fannie Mae, or Freddie Mac–backed loan, servicers are required to report them as “current” on their mortgage. The method of repayment varies depending on your loan and the protection provided. Not all borrowers will be eligible for all options. Ask your lender how these programs work and what you can expect in terms of repaying these amounts.
Housing groups warn that the number of homeowners with past-due mortgage payments could swell even more as people who are currently in forbearance reach the end of their program terms in October. Those homeowners will need to request an extension from their lender if they need more time. “Borrowers who are eligible to be in forbearance will preserve their options to avoid foreclosure versus those who became delinquent and have accumulated penalties and interest in a march toward foreclosure.
Realtors are the most trusted resource for real estate information. Contact a local Realtor to request the “Protect Your Investment” brochure and learn more about options available. Lastly, the Consumer Financial Protection Bureau’s website www.consumerfinance.gov has information and links on mortgage relief options that can help you determine if relief is available.