By: Alejandro E. Jordan, Esq.
If you are experiencing difficulty making on-time mortgage payments due to the national coronavirus emergency, forbearance may be an option for you. Forbearance can help consumers get back on their feet during short-term financial difficulty, but there are a few things you need to know and some important decisions you’ll need to make. Forbearance is when your mortgage servicer, that’s the company that sends your mortgage statement and manages your loan, or lender allows you to pause or reduce your payments for a limited period of time.
Forbearance does not erase what you owe.
You’ll have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them. The types of forbearance available vary by loan type. If your mortgage is backed by the federal government—this includes FHA, VA, USDA, Fannie Mae and Freddie Mac loans—provisions of the recently enacted CARES Act allow you to temporarily suspend payments if you are experiencing financial difficulty due to the impact of the coronavirus on your finances. Loan servicers may also have forbearance or deferment options for non-government backed or private loans, but the exact options available to you may differ.
Here’s how this works for federally-backed mortgages under the CARES Act.
If you are experiencing financial hardship due to the coronavirus pandemic, you have a right to request forbearance for up to one hundred eighty days.
You also have the right to request an extension for up to an additional one hundred eighty days. But, you must contact your loan servicer to request this forbearance. There won’t be any additional fees, penalties or interest added to your account. But, your regular interest will still accrue. Other than telling your servicer that you have a pandemic-related financial hardship, you won’t need to submit additional documentation to qualify for this forbearance.
It’s important to find out what options are available to you.
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