The federal CARES Act gave mortgage payment relief to millions of Americans who were facing financial hardship as a result of the pandemic. It was a lifeline for many homeowners who otherwise would have been unable to make their mortgage payments. However, many of the forbearance plans are nearing the end of their one-year period, which will have significant repercussions for homeowners, as well as Richardson house buyers and sellers. Continue reading to learn what to expect in Richardson after the foreclosure forbearance program expires.
Overview of What Happens At End of Foreclosure Forbearance
Many homeowners in Richardson who took advantage of the foreclosure forbearance program will be released from forbearance in 2021, and repayment will commence.“Depending on when they started their forbearance term and what sort of house loan they have, homeowners who entered mortgage forbearance as part of the federal relief efforts are limited to 12 to 18 months of payment deferment.”
If you’re one of these homeowners, the following are the repayment options you’ll be considering:
- Repaying “mortgage payments that are past due within 6-12 months after the forbearance period’s termination (six months for federally-backed mortgage loans and 12 for Fannie Mae or Freddie Mac loans)”
- Adding the forgiven payment to the tail end of the loan and extending the mortgage
- Extending “increase the loan term to 30 years (or 40 years for Fannie Mae and Freddie Mac loans) and recalculate the monthly mortgage payment to be the same as or lower than before the forbearance.”
Keep in mind that the Richardson foreclosure forbearance program was/is not loan forgiveness. You will still be responsible for paying the principal and interest that you were not required to pay during the forbearance period. You must also continue to make your normal mortgage payments.
Repayment options include the following:
- A one-time, lump-sum payment – This is simply a possibility – lenders cannot require it.
- Intermittent payments – On top of your normal payments, you arrange payback with your service over three, six, nine, or twelve months – whichever makes the most sense.
- Lengthened loan term – You “pay for the missed amount at the conclusion of the extended loan period, with additional mortgage payments,” according to this arrangement.
- Payment deferral – This will enable you to “pay off the overdue sum when[your] home is sold, refinanced, or the loan term ends.” (If you’re thinking about selling, contact your Richardson agent at.
- Loan modification – If you’re on the verge of defaulting on your loan, you may be able to modify it to achieve a lower interest rate or lower monthly payments.
Foreclosure Forbearance Extensions
For many folks who are still struggling financially, a foreclosure forbearance extension is a better option. “Recent reforms by Fannie Mae, Freddie Mac, and the federal government have allowed homeowners to extend their forbearance plans.”
With a traditional loan, you can ask for “another three-month extension, for a total of 15 months of debt forbearance.” You must have been in a COVID-19 forbearance plan before to February 28, 2021 to be eligible.” You can obtain two further 3-month extensions for government-backed loans, such as FHA, VA, and USDA loans, for a total of 18 months forbearance. You must have been in a forbearance plan prior to June 30, 2020 to be eligible.”
Keep in mind that your lender/servicer has the last say on whether or not you get an extension. Also keep in mind that extensions are not granted automatically; you must apply for them.
More Things to Expect and Consider
And here are a few more things to expect after the end of the foreclosure forbearance program in Richardson . . .
- When you call your loan servicer and begin the process of adopting the option of your choosing, you’ll almost certainly encounter long delays, inconsistency, and problems. To satisfy volume demands, staffing will most likely be insufficient.
- You should keep a close eye on your credit score. Missed payments during forbearance shouldn’t affect your credit, but mistakes sometimes happen. So have a look at your credit report.
- You do not have to wait until the six- or 12-month period is through to cancel your forbearance plan and begin payments.
- After you exit forbearance, you can refinance, which for many people is a good idea.
When You Can’t Resume Payments
However, it’s possible that you won’t be able to refund the missing payments and restart regular payments when the foreclosure forbearance period ends. In that scenario, selling your home can be the best option.
According to financial and real estate experts, if you find yourself in this situation, “[y]ou’ll undoubtedly need to investigate disposition options… If you can no longer afford your home, you may have to sell it. Other options for selling a home you can’t afford include foreclosure, short sale, and deed-in-lieu.”
Your Local Agent and Foreclosure Forbearance
Unfortunately, given the status of the economy, many homeowners will be forced to pursue the alternative mentioned above – selling or disposing of their property – once their foreclosure forbearance period expires. People who need to sell quickly and purchasers who want to take advantage of the opportunity are both affected. Using an experienced Richardson agent will benefit you regardless of your position. So, if your Richardson foreclosure forbearance is coming to an end, call us right now.