Last Updated: April 23, 2020
If you are a homeowner experiencing financial hardship related to the COVID-19 pandemic, our hearts go out to you. We want to be a helpful guide as you navigate your options on mortgage forbearance and the CARES Act.
Mortgage assistance through the CARES Act allows you up to 180 days of forbearance, and then can be renewed for another 180 days. Your lender is not allowed to add any penalties, fees, or additional interest to your current scheduled monthly payments. Your regular interest will still accrue. But moving forward with a forbearance plan is big decision, so we want to help you understand all the facts first.
The best place to start is by watching this 4-minute video and reviewing the information provided by the Consumer Financial Protection Bureau (CFPB).
As the video explains, the forbearance plan will temporarily suspend payments for a limited period of time. However -- and this is important -- forbearance does not mean forgiveness. You will still be obligated to repay the delayed principal and interest at some point during the life of your loan. In other words, this is not ‘free money’. It is simply a delay of payments.
Most homeowners will have the following options for repayment:
Lump-sum payment: If your normal monthly mortgage payment is $1,500 and you paused your payments for 6 months due to financial hardships, you could owe $9,000 at the end of your forbearance period plus your regular monthly payment of $1,500. That’s $10,500 at one time! Can you swing it? Many people won’t be able to. Note: If you have a mortgage with Fannie Mae or Freddie Mac, you will never be asked to repay missed payments in one lump sum. We are hoping to hear similar news from other government loan programs on this option soon.
Short-term repayment plan: If you go the route of adding payments to the end of your mortgage, you would spread that $9,000 over 12 monthly payments (while still paying your regular $1,500 a month) which would make your new monthly payment $2,250 a month for the next year.
Loan modification: You may also have an option for an extended loan modification which means your mortgage term can be extended. So, if you have 25 years left to pay on a 30-year mortgage and you postponed your payments for 6 months, your new loan term would be 25 years and 6 months.
Click here for more information and examples to guide you.
If you’re still interested in seeking forbearance, please submit the form below and a member of our Forbearance Help Desk will contact you during normal business hours (Monday through Friday, 9am – 5pm CDT.)
