The $2.2 trillion CARES Act stimulus package requires servicers to provide forbearance — a temporary postponement of payments — to any homeowner with a federally-backed mortgage. Americans with other mortgages may also be able to receive forbearance at their servicers’ discretion. To be clear, mortgage borrowers will still need to pay off their loan eventually if they receive forbearance.
But Forbearance is not forgiveness. You still owe the money that you were paying, it’s just that there’s a temporary pause on making your monthly payments.’
Under a Forbearance agreement, a borrower can pause payments entirely or make reduced payments on their mortgage. Homeowners with federally-backed mortgages are eligible for up to 180 days of Forbearance initially under the CARES Act. At that point, if they’re still facing financial difficulty, they can request an extension of up to another 180 days of forbearance.
The provisions in the stimulus package stipulate that during the forbearance period, mortgage servicers cannot make negative reports about the borrower in question to credit bureaus, including the three main ones, Experian, Equifax, and TransUnion . Borrowers also will not owe any late fees or penalties if they are granted forbearance.
But the real unknown is what to do after the Forebearance period ends and you suddenly owe a large lump sum? How will your current mortgage company react? What other programs will be available thru your current mortgage lender? Will they even inform you? Options with your current lender will exist and having the right professional counsel to advise and/or negotiate is where our legal representation can pay great savings in the form of payment plans and potential reduced interest rates for years to come.
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