Some 3.4 million mortgages are currently in forbearance as a result of COVID-19.
That is according to a recent report from Black Knight. Further, in March, mortgage delinquency increased by 3.39 percent, the first time that month has seen a jump since the “turn of the century,” according to Mortgage News Daily.
We have recently received several questions regarding mortgages and how lending institutions are changing and updating their guidelines on a weekly basis. Therefore, we believe it is critical to know your options.
Many homeowners have heard of a forbearance workout with their lender to assist with their inability to make payments. However, it is important to note that a forbearance is NOT a forgiveness of debt and there may be credit impacts. Guidelines are still unclear as to how the servicers and investors will handle repayment of the forbearance. There has been discussion about adding the payments to the end of the term (i.e. instead of a 30-year mortgage it would be 30 years and 3 months), however it is not clear that lenders will elect this option. It is a strong possibility that lenders will make the entire amount due all at once as soon as the forbearance period is over. For instance, you would owe 3-4 months of mortgage payments all at once. Additionally, there is also discussion that electing the forbearance option will be reflected on homeowners’ credit reports.
Although policies have not been set in place yet, some lenders are considering the possibilities of requiring a streamlined foreclosure process if the homeowner elects the forbearance option, or the possibility of not allowing a refinance to occur if the forbearance option is elected. If you are not impacted by COVID-19 and still able to make your mortgage payment, that is the best option to avoid a potential catastrophe in the near future.
Therefore, if you are debating whether you should make a full payment, partial payment, defer your loan, or possibly apply for a forbearance; please feel free to reach out to us to discuss the possible benefits and/or consequences for each option.
This information should not be taken as legal advice, but an Attorney can be available to discuss your individual needs. Reach out for a free consultation by emailing email@example.com or calling 916.671.3138.