Mortgage Forbearance: The Who, What, When, Where & How

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

 

Mortgage Forbearance:

The Who, What, When, Where & How

 

 

No one knowingly buys a home envisioning that financial hardships lie ahead ...

 

Yet hardships and challenges come even when planning and preparations have been made.  

 

Those are the circumstances that many American homeowners now find themselves in.  The COVID-19 virus has delivered them to their home's door.


If you are one of those Americans that have been negatively impacted financially, either via loss of employment/work hours, income loss, other financial stresses, or health considerations due to COVID-19 ... you are definitely looking for a dose of good news.  And thankfully, there is some to share.

 

A large percentage of U.S. homeowners ... about 70% ... hold mortgages that are federally backed (Government-Sponsored Enterprise (GSE).   The recently-passed (3/27/2020)  Coronavirus Aid, Relief and Economic Security Act passed by Congress offers relief to homeowners that have financed their homes in this manner.  If you're unsure if your mortgage is federally-backed, contact your Mortgage Servicer or loan officer right away.  

(If you do NOT hold a federally-backed mortgage and you have a privately-held or securities-held mortgage:  Relief may still be available to you via other avenues.  Check with your mortgage servicer for further info).  

Mortgage forbearance is one option available to those homeowners that are presently experiencing COVID-19 related financial/payment difficulties ... and also have a federally-backed mortgage.  

What relief is being offered via the CARES act as it pertains to mortgage forbearance?  

Here's the "Who, What, When, Where and Why" of mortgage forbearance info.  It will prove insightful, educational, of value, and also help you move forward should you currently find yourself needing relief:

  • The Consumer Financial Protection Bureau (CFPB) defines mortgage forbearance:  Forbearance is when your mortgage servicer, that’s the company that sends your mortgage statement and manages your loan, or lender allows you to pause or reduce your payments for a limited period of time
  • Mortgage forbearance does NOT mean that your mortgage payments are forgiven indefinitely or erased forever.  
  • Mortgage forbearance is only a temporary agreement and according to your mortgage servicer's forbearance agreement, you will have to repay your missed/reduced mortgage payments as agreed upon at some point in the future
  • Homeowners should not wait until they have missed monthly mortgage payments to request mortgage forbearance
  • Dependent on the type of loan you have, mortgage forbearance options can differ.  Do not proceed with any actions until you fully-understand the forbearance program or option you are being offered by your mortgage servicer
  • As their part of the forbearance agreement, the mortgage lender is promising that they will NOT foreclose on your property during the forbearance agreement period.  
  • It's important to make sure your mortgage forbearance option is received in writing.  Keep safe possession of your documentation and written proof of the agreement in your records
  • Each mortgage holder must APPLY for their mortgage forbearance.  The mortgage servicer does NOT offer it automatically.  Homeowners must be prepared to provide proof of hardship upon their request for forbearance
  • Examples of Lender's mortgage forbearance conversations can be found at:  Fannie Mae ... as well as Freddie Mac.  Proactively prepare for your conversation requesting mortgage forbearance 
  • While in conversation, have your mortgage account number available.  As with your initial mortgage application, information regarding employment, pay stubs, information regarding current debt and savings, tax returns and more may be required during the Lender's assessment of your individual/specific situation
  • Be aware that your Lender may request to review your Credit Report at this time 
  • Be prepared, if requested, to make your request in written form/letter  
  • Continue to protect your credit and finances as well as possible throughout your mortgage forbearance period.  
  • Pay special attention to the upcoming mortgage statements received during the forbearance period.  If you have an escrow account, be aware that insurance and property tax payments should continue to be made during the mortgage forbearance period.  
  • Moving forward, protecting your credit scores, credit history, and credit report will continue to be important.  Monitor your credit health at: annualcreditreport.com
  • The initial mortgage forbearance period is typically (up to) 180 days.  An additional forbearance period may be possible but may require further request/approval
  • Depending on the type of loan you have, mortgage forbearance options/programs available may differ.  Please consult with your Mortgage Lender as to the specifics of your forbearance options and requirements
  • Mortgage forbearance is made at the sole discretion of the Lender
  • AT THIS TIME and of this date (5/5/2020):  There is no law that specifies what happens once your mortgage forbearance period is over.  Mortgage servicers/Lenders continue to work on specific details of the options they offer.   

Those options can/might include:

         A.  The option of a Loan Modification (a restructuring of mortgage terms)
       B.  Mortgage term date is delayed or "pushed back"
       C.  Monthly mortgage payments may be increased moving forward (making up for payments missed while in forbearance) 
       D.  Payment of one lump sum (often called Reinstatement

Should you think that you will NOT be capable of returning to your initial/normal monthly mortgage payment schedule, contact your Mortgage Servicer well in-advance of the forbearance period expiring.  Other additional options may be available to you.  

The objective of mortgage forbearance is to assist homeowners through a difficult time and to help them sustain the least amount of credit/financial hardship and injury as possible while navigating their financial difficulties.  

Documenting, conversation, and full-disclosure with mortgage servicers also aids homeowners in achieving that goal and each action will benefit you greatly ... both in the short and long term ...  

 

 

* Are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicago - Chicagoland - IL/WI?

 

Contact me today! I'll put my 40 years of mortgage experience and expertise to work on your behalf.

I'm easily found at:


 
Gene Mundt
 
Mortgage Originator - NMLS #216987 - IL Lic. 031.0006220 - WI License #216987
 
American Portfolio Mortgage Corp
NMLS #175656
 
 
Direct: 815.524.2280
Cell: 708.921.6331
eFax: 815.524.2281

 

 

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

Comments (33)

Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Endre Barath, Jr. I couldn’t agree more and I just hope it helps anybody who needs help right now. Sending good vibes to you and yours.

May 06, 2020 10:04 PM
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

So important people know what they are doing and what the consequences may be good bad and or ugly!  We rely on the knowledge you and George and good lenders provide us for our clients. 

If you can make your payments PAY  If you are in trouble read this and work with a lender of high caliber such as yourself!

May 07, 2020 12:20 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Thank you, Debra Leisek ... you put me in very good company when you mention George Souto's name.  The bottom line is truly to ask questions and gain the facts ... I hope the message gets across.


Gene 

May 07, 2020 01:08 PM
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi there are many misconceptions about this topic..... you've set everyone who reads this on the right path....

May 07, 2020 03:04 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

I sure hope that it motivates people to ask questions and search for answers, Barbara Todaro ...


Gene

May 07, 2020 01:09 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

What a great post, Gene, explaining this complicated issue that many people don't truly understand. Thanks for doing this. I'll be sharing with people who need the information.

May 07, 2020 05:12 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

The highest praise, Nina Hollander ... thank you!  I hope it proves beneficial ...


Gene

May 07, 2020 01:09 PM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Very clear and well laid out explanation of what and how and where of forbearance.

May 07, 2020 06:58 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Thank you, Nick Vandekar, 610-203-4543 ... it's a complex (and very personal) issue for borrowers.  Glad that it made some sense ...


Gene

May 07, 2020 01:10 PM
Eileen Burns
Trans State Commercial RE Ft. Lauderdale/Miami/Palm Beach - Fort Lauderdale, FL
FL Probate Agent, Hotel & Land Specialist

thanks Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi  very clear and precise info.  Also shout out to Richard V. Foster, Esq. for more consideration:  

"three months forbearance would result in INCREASING the loan balance by $2,700 to a new total of $102,700. Oh, and every month that amount will compound from the unpaid interest, even higher.

 

So making a payment arrangment, depending on the loan balance and time of forbearance, can cost many thousand of dollars in lost equity."

May 07, 2020 07:10 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Appreciate your kind words, Eileen Burns ... as I shared above, my intent is to spur people into asking questions and gaining info with my post.  I advocate no one "answer" as a solution-for-all.  It's truly a personal and specific answer needed.  Richard V. Foster, Esq.'s is an option and he offers food for thought.  And I suspect hopes to motivate questions being asked as well ... something I applaud.


Gene 

May 07, 2020 02:20 PM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

You mention credit scores several times. Does this forebearance show up on your credit negatively?

May 07, 2020 07:14 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Hella M. Rothwell, Broker/Realtor® ... it is not clear just what the fallout for credit scores/credit reports will be if someone chooses forbearance.  I have not personally seen a credit report that addresses a forbearance agreement/option as of yet ... 


 I've included a link to an article I found on VantageScore that might help answer your question a bit more fully:  How to Protect My Credit Score if Financial Hardships Prevent Me From Paying My Bills.  Be aware that the "fallout" may evolve over time as we get deeper into this crisis.


Hope it proves insightful ...


Gene


 

May 07, 2020 02:38 PM
Anthony Kirlew
Group 46:10 Network @ eXp Realty - Gilbert, AZ
Helping You Make Fiscally Sound Choices

Great post Gene! Early on it seemed that there was some confusion between forbearance and deferred payments where some were saying, "yeah, that's where they put the payments at the end of your mortgage." Nice to have clarity to share the proper info.

May 07, 2020 07:42 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

You're right, Anthony Kirlew ... I was seeing many articles addressing those topics, as well.  The crux of my message here surrounds the need to ask questions and gain solid reliable answers prior to taking any action.  Hopefully, I was able to assist in borrowers doing that.  Appreciate your kind words .. thank you ...


Gene

May 07, 2020 02:29 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Thank you for this, Gene. it is very timely and informative, as usual. (Borrowing).

May 07, 2020 12:41 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Love it when you "borrow", Jane Peters ... thank you!  Hoping the info proves helpful to you ... and those in need ...


Gene

May 08, 2020 08:44 AM
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

Great to have all of this in one place, there is a ton of misinformation out there and a lot of forbearance options may not help the person in question. 

May 07, 2020 01:23 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

True, Kevin Mackessy ... all things lending and financial are increasingly more and more specific to the person asking the question or experiencing the challenge ... 


Gene

May 08, 2020 08:46 AM
Dale Taylor
Re/Max 10 New Lenox Illinois - Frankfort, IL
Realtor = Chicago Illinois Homes Townhomes Condos

Hey Gene, consider writing a one on the difference between deferment and forbearance. Thanks also for sharing my posts along the way. You are priceless Sir. Thanks

May 07, 2020 01:30 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

How nice of you, Dale Taylor ... thank you so much!  (Trying to keep up with you in the nice department)  Will try to hammer something out regarding the two issues ASAP .. thanks for asking.  


Hope you're well and staying safe ... we still need that coffee!


Gene

May 08, 2020 08:47 AM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi    Very valuable report about mortgage forbearance.

May 07, 2020 01:58 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Thank you John Pusa 

May 08, 2020 08:48 AM
Lindsay Reagan, Realtor
Bowen Realty - Wellington, FL

Great Post with lots of good information that I can share.  I have had some clients call me expressing some fear about upcoming mortgage payments.  I try to let them know that there are "No Free Lunches" and that these payments are not forgiven or forgotten.

May 07, 2020 04:18 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Right now, we're all getting those questions Lindsay Reagan, Realtor ... and  I've always found AR a great place to find the insight and info I need.  Glad I was able to share something that you will find useful and helpful for your clients.  Thank you,


Gene

May 08, 2020 08:50 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 
My concern is that some/many people may panic and jump for help too soon. Yes, it buys time and a premium.  

I "inquired" with my lender at the onset of the Pandemic. I made it clear when I called that I am a RE Broker and I am asking for general information. The next thing I know I received a loss mitigation package and my account was locked out.  I could not make a payment.  I was not happy about that.  I could not reach the bank due to the high volume of calls. What an order to resolve their error ... an inquiry is NOT A REQUEST.  

BEWARE, HOMEOWNERS! 

May 08, 2020 09:14 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

JMO ... but your Lender is in serious need of improved listening skills, Kathleen Daniels. That conversation shouldn't have triggered the reaction it did.  That said, I think anyone that finds themselves facing this challenge should do some fact-finding and NOT wait until the last minute and crunch-time to do so.  (Nothing typically moves quickly in the lending world right now).  But it must be clear to the Lender/Bank, etc. that it is an inquiry only ... nothing formal is to be started. 


Hope you get your issue straightened out quickly (and easily) ... and have a talk with that Lender too ... good luck!


Gene

May 08, 2020 02:04 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

I question if many will ever have the money to catch up ? Have they considered adding the missed payments to the loan balance 

May 08, 2020 12:50 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Unfortunately, I don't have an answer for that Michael J. Perry ... and I don't think anyone else has a reliable one either.  There are simply too many unknowns right now.  We pray for the best outcome ...


Gene

May 08, 2020 02:07 PM
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing!

If you are one of those Americans that have been negatively impacted financially, either via loss of employment/work hours, income loss, other financial stresses, or health considerations due to COVID-19 ... you are definitely looking for a dose of good news.  And thankfully, there is some to share.

May 09, 2020 05:11 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Gene:

As always you have provide excellent education and advice in an easy to understand format. Anyone who might need a forbearance now should read this.

Jeff

May 09, 2020 10:39 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

I appreciate your kind comment, Jeff Dowler, CRS ... and I'm hoping that the post serves as motivation for those in need.  


Gene

May 10, 2020 01:21 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I was just looking at the latest updates and this is fine with me as long as he gets people out of any trouble. lol possibly.

May 09, 2020 11:17 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Jeff Dowler, CRS Jeff, I wouldn’t expect anything less and I hope you’re doing well and staying safe in this crazy crazy time

May 09, 2020 11:19 PM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

GREAT explanation of lall aspects relating to a mortgage in the current housing climate for those that really need answers!  Thanks as always. 

May 13, 2020 01:43 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Appreciate the thumbs up, Jan Green ... trying to get the info out there in a timely fashion.  The earlier the help is requested, the better ...


Gene    

May 14, 2020 01:00 PM

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