Forbearance QA

What is the Pandemic Forbearance Plan?

For homeowners who qualify, the forbearance plan temporarily pauses mortgage payments. It’s not a payment waiver or payment forgiveness. All payments will need to be repaid at the end of the forbearance period, but you may have options if you can’t repay it all at once.

Forbearance is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. You will have to pay the payment reduction or the paused payments back later.

Forbearance is not forgiveness.

Forbearance is not forgiveness. Forbearance does not relieve the borrower’s obligation, it provides temporary payment relief for people experiencing hardship. That’s why it’s imperative for borrowers to work with their (loan servicer) to understand the option that best fits their needs

It's just putting a pause on your mortgage payments for a few months. ... Your bank or loan servicer may sometimes use the terms deferral and forbearance interchangeably

Forbearance is not Deferment

If you qualify for deferment, it's a better option than forbearance, but neither is an ideal long-term solution for student loan borrowers. ... The major difference is that forbearance always increases the amount you owe, while deferment can be interest-free for certain types of federal loans.

Does forbearance affect my credit score?

A lender can report a forbearance to the credit companies, but typically it will agree not to report any missed payments if you follow the terms you agreed to with the lender. The forbearance shouldn't affect your credit score and is certainly less damaging than a late mortgage payment

What are forbearance terms?

The specific terms of a forbearance agreement will vary from lender to lender. Example: In exchange, the borrower must resume the full payment at the end of the forbearance period, plus pay an additional amount to get current on the missed payments, including principal, interest, taxes, and insurance.

Who decides the forbearance terms?

The terms of a forbearance agreement are negotiated between the borrower and the lender. The opportunity for such an agreement depends on the likelihood that the borrower will be able to resume monthly mortgage repayments once the temporary forbearance is over. The lender may approve a full reduction of the borrower's payment or only a partial one, depending upon the extent of the borrower's need and the lender's confidence in the borrower's ability to catch up later.

Do I qualify for forbearance?

You qualify for the Pandemic Forbearance Plan if you have a federally backed loan (Fannie Mae, Freddie Mac, FHA, VA, USDA) and COVID-19 has impacted your ability to make your mortgage payment. Your property must fall into one of the following:

· a single-family residence;

· a 1-4 family residence; or

· an individual unit of a condominium or cooperative.

it is important to note that a mortgage forbearance is not granted to all homeowners. Rather, it must be applied for through the loan servicer and evaluated on a case-by-case basis; and guidelines for federally backed mortgages and privately-secured mortgages vary.

Being awarded forbearance on a mortgage requires contacting the lender, explaining the situation, and receiving approval. Borrowers with a history of making payments on time are more likely to be granted this option. The borrower must also demonstrate the cause for repayment postponement, such as financial difficulties associated with a major illness or the loss of a job.

You can find out if your loan is owned by

Fannie Mae : call them at 1-800-232-6643

Freddie Mac :

What options may be available to me if I cannot pay the full amount of the missed payments at the end of the forbearance?

If you get to the end of your forbearance period and can’t bring your balance current, you may have a few options:

· Extend the forbearance period up to 12 months total.

· Enter a repayment plan — Over a set number of months (usually two to six), an extra amount will be added to your regular mortgage payment to cover the amount owed from the forbearance.

· Modify your loan — If you qualify, your loan’s terms (which could include interest rate, term) may be adjusted to provide an affordable payment and cover the amount owed. This may include an extension at the end of the loan giving you additional months to pay.

How long can my forbearance last?

During the covid-19 pandemic, the mortgage servicers are offering forbearance up to six-months. but it is decided on a case-to-case basis.

How to request a forbearance?

Call your servicer and let them know your situation immediately. Ask them what “forbearance” or “hardship” options may be available.

Some servicers will require that you request forbearance or other assistance within a certain amount of time after a disaster or other qualifying event.

*Information courtesy Mr cooper, Investopedia, AIME

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