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5 Things Homeowners Need to Know About Forbearance and COVID-19


  1. Homeowners are Still Responsible for Mortgage Payments A forbearance agreement only allows homeowners to temporarily suspend their mortgage payments, but once the forbearance period is over, all payments are due. This could prove difficult for borrowers who assume that payments will be pushed back, as opposed to temporarily suspended. Ultimately, they could be surprised when they find themselves responsible for multiple months of mortgage payments at once, as soon as the forbearance period is over, if loan modification or other repayment options have not been specifically arranged with the servicer in advance.

  2. Borrowers May Have to Prove a COVID-19 Related Hardship In order to apply for a forbearance agreement, homeowners may need to prove how COVID-19 impacted their ability to make mortgage payments. Homeowners should contact their servicer for more details on what should be provided.

  3. Forbearance May be Granted for up to 180 days It’s important to note that most servicers are offering forbearance agreements for 90 days initially, although the forbearance time period could be up to 180 days, depending on hardship circumstances. Some homeowners could also be eligible for an extension of up to another 180 day period if necessary – borrowers should contact their loan servicer for more information.

  4. Foreclosures are Temporarily Halted Foreclosures for federally-backed loans, including eligible loans held by Fannie Mae, Freddie Mac, FHA, VA, and USDA are temporarily halted. Some homeowners may not know if their loan servicer is federally-backed, so educating them on their type of loan is important. It is also critical for the homeowner to contact their loan servicer to discuss additional available options and the coordinating foreclosure halt time periods associated with them.

  5. Applying for Forbearance May Not Impact Credit As long as mortgage payments are made within the outlined time of the forbearance period, there will be no negative impact on credit history. However, homeowners who are only reacting to news headlines and assuming that all mortgage payments are delayed may see a negative impact on their credit if a forbearance period is not applied for and mortgage payments are missed. Additionally, there could be further credit implications on credit score and history that are unforeseen at this time. Because there is a lack of reporting from credit agencies about the potential impact of forbearances, homeowners should do everything they can to make their monthly mortgage payments as planned and only apply for a forbearance or deferment as a last resort.


Please watch this video from the CFPB: What you need to know


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