With the end of mortgage forbearance looming, there is near a half million low-income homeowners in the U.S. who are affected. These borrowers were in plans that allowed them to stop loan payments during the pandemic. This presented a challenge to mortgage servicers who were charged with helping struggling borrowers get onto payment plans that they could afford.
In what is being called a “forbearance overhang”, the postponed payments add up to more than $15 billion in mortgage payments, or approximately $14,200 per person.
Some borrowers will be able to push their missed payments to the end of their loans while others may be able to capitalize on the hot housing market to refinance or sell their home.
Black and Hispanic homeowners were disproportionately affected by pandemic related job losses.
Here is what some homeowners can do as mortgage forbearance ends:
- Contact your mortgage servicer
- Servicers have simplified their processes to assist with inquiries from borrowers who are reaching the end of forbearance
- Find out who Guarantees your mortgage
- Payment plans for borrowers who have a Fannie Mae guaranteed loan may be different from Freddie Mac guaranteed loans or those held by private investors
- Choose a Payment Plan
- Options can vary. Borrowers should be able to choose between resuming their previous payments, receiving a loan modification that reduces their monthly payments, or paying what they owe by selling their home or refinancing.
- Find a Housing Counselor
- Borrowers that are struggling to find an affordable payment plan or are unsure about where their mortgage stands may seek help from a housing counselor that may help them navigate the process
- Borrowers can also turn to Fannie Mae or Freddie Mac (i.e.) for more information about available assistance
Sources: Reuters, Factbox