First, I hope this finds you and your family well.

2020 will go down as one of the craziest times… EVER. Virus, social distancing, no school, job loss, and new ways that we have to conduct everyday life.

In my world of mortgages, we are also seeing record market swings, unprecedented Fed actions, and temporary underwriting changes to both protect the lending environment, and to help you get through all this.

MORTGAGE FORBEARANCE

I want to cover some VERY important information about mortgage forbearance options that you could be looking to qualify for.

There is A LOT of information swirling in the media, online and in zoom meetings about this. There are going to be very specific circumstances that apply to borrowers. Those circumstances are all going to depend on who you make your payments to, and if your loan is owned by Fannie Mae, Freddie Mac, Ginnie Mae or is a portfolio product. Yeah, all those terms sounds like Greek right, but each of those underlying companies own most mortgages, and they make the rules.

There is a MASSIVE difference between a forbearance and a deferment or forgiveness. Too many terms are being thrown around and we don’t want to see anyone unintentionally get in trouble.

If you are experiencing a true hardship and do not think you will be able to make your monthly mortgage payment, please give your servicer (who you make your payment to) a call and ask about options. Until then, you…

MUST MAKE YOUR MORTGAGE PAYMENT

A forbearance is simply a PAUSE in time, which could be 90 or 180 days where you have an agreement in place with your servicer to NOT make your scheduled payment. The payment(s) that were missed would then either be due in FULL at the end of the agreed-upon period or can be worked out as a payment plan over an extended period of time. My guess is that most servicers will opt for a balloon payment at the end of the forbearance period. They are going to be cash hungry and need that injection of liquidity after having multiple borrowers not paying on a normal schedule.

One example of how this can be a DANGEROUS road to go down –

• $2,000 monthly mortgage payment.
• April 1st payment is due (most cases, due on 1st, late by the 16th).
• A borrower applies for forbearance (not all applications will be approved).
• 6-month Forbearance granted, no payment due for April to Sept 2020.
• Oct 1st, 2020. $14,000 balloon payment due to servicer ($10,00 for April to September, plus the current month $2,000)
• If you can’t (and probably wont be able to) make that balloon payment, it MAY be possible to get the past due six month paid over the next 12 months. So using this example, your mortgage payment would jump to $3,000 a month for the next 12 months. Yikes.
• Missing this balloon or making a partial payment means you would immediately be eligible for FORECLOSURE. 

There is NO FREE MONEY here with forbearance plans guys. If at all possible, I would HIGHLY suggest that you continue making your normally scheduled payments just as you would have if this COVID-19 mess hadn’t happened. I know that might be hard for some to hear, especially with mass layoffs, sickness, and uncertainty.

If you decide to contact your s lender / servicer to ask for relief, please just be careful with what they are offering. There are other options floating around about “Modifications” to your loan. These have been around before, and even though there are more safeguards in place now, your credit and ability to borrow in the future may be impacted by opting to agree to modification terms.

We are here to help guide you through the unknown. Please let us know if you are running into any issues with a servicer and we will do our best to assist.

On a lighter note, you might have some stimulus money coming!

Great resource here for calculating how much your stimulus check could be.

As always, I hope everyone is doing well, staying home and keeping healthy. Let us know if you have any questions. The Joe Metzler Mortgage Team can be reached at (651) 552-3681.

Licensed in MN, WI, IA, SD, ND. NMLS 274132