The government has made it very easy for homeowners to get a forbearance on their mortgage during the pandemic. This has been a life line for many homeowners who have been affected financially by COVID-19. In this time of crisis, all a borrower has to do is pick up the phone and call their mortgage servicer and ask for payment relief. But how are homeowners going to pay the forbearance back? Are homeowners really being protected from delinquent marks and credit consequences?
The biggest step is to communicate with your servicer every step of the way.
Not all repayment options are available to every borrower. By repayment options we mean: loan modifications, repayment plans, combination plans and lump sum payments. You must speak to your servicer before your forbearance plan ends to work out how you will repay the skipped payments.
Another factor to consider is that your forbearance termination is not designed to coincide with your employment situation. If you are unable to begin working again when your forbearance is up, you will not have a way to repay the mortgage. Or perhaps you are working, but your pay was cut due to the pandemic. And because there are many other homeowners in your same position, mortgage servicers are receiving a flood of requests for help – making errors more probable. As more and more homeowners exit their forbearance plans, they are being hit with bills that they thought they were exempt from.
CNN reports that one borrower accepted a three-month deferral and saved $900 a month. She thought she owed $2,700 after the forbearance period ended. The bank thought differently. It said she owed $4,700. It turns out, CNN reported, that the borrower’s mortgage was not among those protected by the CARES Act.
There are a few things you can do to ensure that your forbearance is being applied correctly to your account.
1. Review Your Credit
Review your credit report to make sure there are no factual errors, out-of-date items or entries that seem odd or unusual.
2. Call Your Loan Servicer
Call your loan servicer and discuss the status of your mortgage loan. Be clear about your expectations for your forbearance plan. Also ask about your property taxes to verify that while you are not paying your mortgage, your servicer is still taking care of those. Some lenders are requiring borrowers to log in online, or call each month to confirm the forbearance is still needed.
3. Call Your Home Insurance Company
Make sure your loan servicer is still making your homeowners insurance payments and that your coverage is still in effect.
4. Put Your Mortgage Payments into a Savings Account
At the end of your forbearance, your lender may require you to repay the full amount of your skipped mortgage payments. If you are able to put money into savings each month, you'll be more prepared for your repayment options.
Get ahead of potential issues. The bottom line is, even if your servicer is not trying to do you wrong, mistakes happen. These are frightening times, full of uncertainty for homeowners everywhere. Cover all your bases and do everything you can to make sure you and your home are in the right position to survive the pandemic.