When mortgage forbearances under the CARES ACT were promoted, no one realized 6 months later we would still be in the midst of this COVID crisis with forbearances ending, and no easy answers in sight.
Information was confusing, and many people signing up for forbearances did not realize that the full amount would be due at the end of the agreed upon period in order to become current on their mortgage.
In fact, real estate industry leaders shared incorrect information at the beginning of the COVID pandemic, claiming a forbearance does NOT require a balloon payment at the end, but that the delinquency would be wrapped on the the end of the loan. That’s a deferment and must be negotiated with your lender. You can hear it for yourself in this video:
Also unclear was the impact a forbearance has on your credit and the ability to qualify for a refinance.
What should I do?
Experts say it’s important to reach out to your lender ahead of the ending of your forbearance to discuss options. Such as converting the missed payments to a deferral on the end of the loan (see articles below).
Also, you’ll want to check your credit report to see how exactly this is being reported.
Where can you get help? These consumer resources include links for helpful details:
“Under provisions of the CARES Act, if you get mortgage forbearance on a federally backed loan as part of COVID-19 relief, your loan servicer cannot charge extra interest on forbearance repayments or require you to repay excused payments in a single lump sum at the end of the forbearance period.” Experian.com
There are different options on different types of loans.
What’s so confusing are the ‘sound bytes’ shared, when what’s needed is detailed information regarding your particular situation.
How do I negotiate with my lender about my forbearance?
Negotiating with your lender can be scary, and confusing. Two local experts recently offered their insights and availability on my Podcast to help home owners in the Greater Philadelphia and New Jersey areas – Lee Perlman, Bankruptcy Attorney and Michael Daiello, Real Estate Dispute Attorney and Litigator who specializes in helping landlords who face the impact of tenants not paying rent under the CARES ACT rental forbearance protections.
Take action now!
Please know you are NOT alone; see my detailed market update on distressed properties – Q3 Distressed Property Report ;
The most important thing to do if you’re facing problems with your mortgage is to ask for help right away!
It’s emotionally challenging and can feel overwhelming, but there is hope, and there is help. Doing nothing may put your property at risk of foreclosure.
Start with visiting www.FightTheBank.org for more information about short sales and options to avoid foreclosure.
Please comment below or reach out for a confidential conversation. I’ll gladly connect you with local experts who can help in your situation.
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