Approaching A Mortgage Forbearance Expiration?

Marcella Parks pexels-olya-kobruseva-5428834-1024x684 Approaching A Mortgage Forbearance Expiration?

The CARES Act foreclosure moratorium has expired. Your Mortgage forbearance is ending and you need to work out a repayment plan or loan modification to avoid foreclosure. What should you do and where could you start?

At the time of this post, an unprecedented event has occurred across the globe… COVID-19. A pandemic that has rocked the globe and has caused the majority of life, work, activities, industries, and markets to come to an almost screeching halt. We began living in a time of shelter in place, social distancing requirements, and mask mandates. Large percentages of American households have experienced a loss of income and/or employment, majorly affecting the economic sector with many taking advantage of the CARES Act mortgage forbearance and other programs offered. 

This new way of living produced a wave within the real estate market, creating unparalleled levels of growth and turbulence. In April and May 2020, US home sales dropped to its lowest since 2007 – 2009. However, the market quickly rebounded and real estate began to veer into a different direction. The law of robust demand and constrained supply caused an appreciation in home prices and a lucrative sellers market. Home values hit another all time high. Buyers were now buying in droves and sellers were still selling, but barely.  Buyers were incentivized with low interest rates to move, buy, and build, creating the overwhelming demand. Concerns of reluctant sellers, foreclosure moratoriums, and tenant eviction moratoriums helped contribute to the supply shortage. 

In response to the economic lashing and to help prevent the spread of COVID-19, congress passed the CARES Act (Coronavirus Aid, Relief, and Economic Security) and signed it into law March 27, 2020. The act created eviction and foreclosure moratoriums for federally backed mortgages due to COVID hardship (job loss, income loss, etc). Millions took advantage and notice I wrote federally backed mortgages (FHA, VA, USDA, Fannie Mae, Freddie Mac). Not all mortgages are covered under the CARES Act and not many people know it (other mortgages covered under private lenders offered their own relief. To determine your type of loan, call your mortgage servicer). The CARES Act stipulates one could receive forbearance (pausing or reducing loan payments for a temporary period) for up to a certain amount of time without penalty. In addition to the act, a homeowner can call their mortgage servicer (the company that takes your payments) and advise they have been impacted by COVID- 19. With the option to ask for an extension. It has provided homeowners some sense of relief. Easy to enter but sometimes tough to exit.

As of July 31, 2021, the CARES Act foreclosure moratorium ended for some participants, yet many still remain in the program. Now comes the big question regarding what happens next?  Or when does your forbearance period end? 

Here are some starting tips to get you moving as you exit a mortgage forbearance:

  1. Contact (via phone or email) your mortgage service provider before your forbearance period ends.  Or if you have any questions or concerns relating to your mortgage and/or forbearance. Remember, if you use an email it will leave a trail of communications and documentations with your lender.
  2. Ask for a forbearance extension. Who owns your mortgage, is it federally backed? If the answer is yes the government, The CARES Act provides for an extension of the forbearance during the covered period when REQUESTED by the borrower. Contact your lender if you need more time and ask when your right to request an extension expires. If your loan is privately owned, inquire if an extension is offered and the terms.
  3. Are your property taxes and homeowners insurance being paid? Some homeowners make a single mortgage payment to the loan servicer that covers taxes and insurance. Talk to your servicer or go through the city or county where you pay taxes and/or call your property insurance agent to determine if you’re still covered.
  4. Read and listen to any and all communication from your mortgage company/servicer. Pay attention to terms, fees, late payments, or foreclosure dates. This is an unprecedented time for banks and lenders, therefore, banks are experiencing a larger volume of calls and paperwork. Things slip through the crack and clerical errors can happen, which can cause problems for the borrower. Document all phone calls, voice mails (left and received), with dates, times, representative name, conversation notes, and follow ups. If you are contacting your lender and not receiving any call back or help, I have a link below for more information.
  5. Keep an eye on your credit. Are you being protected from delinquent marks and credit dings?
  6. Beware of scammers! Know who you are dealing with. 
  7. Contact an approved HUD Housing Counselor (800-569-4287).
  8. When the forbearance period ends, how do you repay the money? What are your options if you can’t meet the terms? Ask about and discuss other loss mitigations/modifications options that may be right for you (i.e., Forbearance (there are many types), Short Sale, deed-in-lieu of Foreclosure, etc.).
  9. Contact a Real Estate Agent and discuss the options of selling your home if you are unable to meet the forbearance terms and/or you may not qualify for another loan modification or loss of mitigations package.
  10. It is very important to contact a lawyer, tax advisor and/or accountant for any legal or financial advice and conversations.
  11. Do your research. Educate yourself on the programs and rights available to you that will help you during an interesting, difficult, and unique time. Know your options. Ask for them. Ask as many times as you need to. Be proactive.

In conclusion as I mentioned before, this is a unique and new experience for everyone. My heart is that maybe this information can help someone who doesn’t know the next step or need direction. I’ve seen, heard, and read the statement since the beginning of the pandemic… We are all in this together. That statement rings true, there is help out there for people who need it and people willing and able to help those that need it. Remember each case is different and you should be in contact with your financing institution regarding your specifics and qualifications. 

If you have specific questions or need help in the state of Georgia and need help, contact me.

Below are some helpful links to check out for tips/advice on the CARES Act, mortgage forbearance, and other helpful information:

Look up your loan: www.knowyouroptions.com/loanlookup.com

How to file a bank complaint: 

Consumer Financial Protection Bureau (CFPB) –

http://www.consumerfinance.gov/complaint/

File a complaint about banks and lenders –

 www.usa.gov/state-consumer

Beware of Scams:

Foreclosure Rescue Scam:

https://www.atlantafed.org/-/media/documents/community-development/data/foreclosure-resource-center/foreclosure-rescue-scams-real-estate-fraud-prevention-and-awareness.pdf

Federal Reserve Consumer Help – Scams

https://www.federalreserveconsumerhelp.gov/consumeralerts/yellen-scam-emails-more

Other Resources:

Landlord and Tenant Disputes: 

https://www.usa.gov/housing-complaints#item-35792

Learn your options:

https://www.consumerfinance.gov/about-us/blog/the-cdc-eviction-moratorium-has-ended-learn-your-options/

State, County and City Consumer Protection Offices:

https://www.usa.gov/state-consumer

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