MY MORTGAGE FORBEARANCE ENDED. NOW WHAT?
Unfortunately, millions of American households suffered health challenges and financial hardship due to the COVID-19 pandemic. As such, many people found it difficult to continue paying their mortgage. To cushion the effect, the federal government offered mortgage forbearance relief – temporary modification on a home loan – to homeowners who were affected. However, with the mortgage forbearance program coming to an end, homeowners must evaluate their possible options to pay back their suspended mortgage payments.
At Bond Law Office, our team has the resources, skill, and diligence to advise and guide clients in bankruptcy-related matters, including COVID forbearance. Our experienced Arkansas bankruptcy attorney can help evaluate your unique situation and enlighten you about the different repayment options accessible to you once your mortgage forbearance ends. We’re proud to serve clients across Fayetteville, Fort Smith, Waldron, Eureka Springs, Harrison, and the Arkansas River Valley area.
Understanding Mortgage Forbearance
Mortgage forbearance is a situation in which your lender or mortgage servicer allows you to modify – pause, suspend, or reduce – your mortgage payments entirely for a limited period while you rebuild your finances. In 2020, many Americans pursued mortgage forbearance relief under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The mortgage forbearance program made it possible for borrowers to suspend their home loan payments and weather their financial difficulties for a period of time.
Under the CARES Act Mortgage Forbearance program, homeowners are entitled to an initial forbearance plan of between three and six months. In case you need more time to recover financially, you can request up to two additional three-month extensions, for a maximum of 18 months of total forbearance. Upon exiting the mortgage forbearance program, homeowners will have to continue repaying their home loan repayments and any interests accumulated over time.
Other Options Now That Forbearance Has Ended
If your forbearance period has ended, your available repayment options include:
Repayment Plan: You can propose a feasible repayment plan to your lender. The repayment plan allows you to settle missed payments over a specific time, followed by increased monthly mortgage payments.
Deferral or Partial Claim: Partial claims allow you to resume regular monthly mortgage payments. All missed payments will be transferred to the end of the loan – or after refinancing or selling the property.
Loan Modification: Through home loan modification, you can change the principal amount, interest rates, or length of your mortgage. This makes your mortgage payments more affordable and easily repayable.
Mortgage Reinstatement: Mortgage reinstating can help stop a foreclosure on your home. Once the forbearance period ends, your mortgage will be restored after you have paid back the total amount owed through a lump-sum payment.
An experienced attorney can advise you about the benefits and drawbacks of each repayment option and help you decide options for your unique situation.
Repayment Options for Various Agencies
Here are the repayment options for various agencies:
Fannie Mae & Freddie Mac loans – Repayment plan, loan modification, or payment deferral
FHA/HUD loans – COVID-19 recovery modification or COVID-19 recovery standalone partial claim
USDA Rural Housing Service Guaranteed Loan Mortgages – Payment deferral, affordable repayment plan, or term extension
VA loans – Loan modification or repayment plans
If you obtained a non-federally backed loan, be sure to check with your loan servicer to understand your available forbearance repayment options. A knowledgeable attorney can help explore your options and educate you about the rules to avoid foreclosure.
A New Rules to Avoid Foreclosure
The Consumer Financial Protection Bureau (CFPB) issued new rules to protect homeowners experiencing financial adversity. The new rules give affected homeowners the opportunity and sufficient time to avoid foreclosure. Below are some key provisions of the new rule:
Loan servicers must give homeowners three or more options to avoid losing their property.
Before starting any foreclosure proceedings, debtors are required to complete and submit a loss mitigation application. The loan servicer must review their application thoroughly.
Loan servicers must make considerable efforts to reach out to the debtors before starting foreclosure proceedings.
The loan servicer must confirm that the property is abandoned under state and local laws before starting foreclosure proceedings.
These new rules to avoid foreclosure will be in effect from August 31, 2021, to January 1, 2022.
Get the Guidance You Need from an Experienced Bankruptcy Attorney
With your mortgage forbearance drawing to a close, making adequate preparation on how to repay your home loan is crucial. This involves having a strategic repayment plan in place to exit the mortgage forbearance program seamlessly without experiencing financial hardship. An experienced bankruptcy attorney can help explore your available repayment options and help you navigate key decisions.
At Bond Law Office, our team can help determine the ideal option for your unique situation – continue making mortgage payments, modify your home loan, defer payments, or sell your property. Using their extensive experience, our team can help you strategize how to exit mortgage forbearance smoothly, repay your suspended mortgage, and avoid foreclosure on your property.
Contact us at Bond Law Office today to schedule a one-on-one case assessment with a knowledgeable bankruptcy attorney. Our experienced team has the comprehensive legal counsel and reliable advocacy you need to make intelligent decisions going forward. Our firm proudly serves clients across Fayetteville, Fort Smith, Waldron, Eureka Springs, Harrison, and the Arkansas River Valley area.