CPAH’s HUD-Certified Housing Counselors can review your situation and help you understand your options and available resources. There is no charge for our services. Counselors can help you assess your situation, apply for grants, intervene with your lender, evaluate forbearance offers, secure loan modifications, coordinate with mediation, and more. We understand the information can be overwhelming and the process may be confusing. We are here to help.
To get started, please complete our Intake Form.
We will reach out to you within 48 hours. Questions? Contact our Intake Coordinator, Reema Shakya, at firstname.lastname@example.org or 847-263-7478 ext 15.
Frequently Asked Questions About Forbearance:
What is mortgage loan forbearance?
Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time due to a financial hardship. Forbearance does not mean your payments are forgiven or erased. You are still required to repay any missed or reduced payments at some point in the future. There are many different forbearance programs and options depending on the type of your loan and/or the servicer. Always make sure that you understand the terms of your forbearance program, especially how you will be expected to repay the missed or reduced payments.
How do I request mortgage forbearance?
To request mortgage relief, you will need to reach out to your servicer. If you are covered by the CARES Act, you only need to explain that you have a pandemic-related financial hardship. Be patient but persistent in working with your servicer because they are experiencing a high call volume due to the pandemic. You can also check your servicer’s website for information about mortgage relief and/or the ability to request relief online. Have your account number ready and be prepared to ask the following questions:
- What options are available to help temporarily reduce or suspend my payments?
- Are there forbearance, loan modification, or other options applicable to my situation?
- Can you waive late fees on my mortgage account?
To help you prepare for the conversation, see the following COVID-19 forbearance scripts used by Fannie Mae and Freddie Mac servicers:
- Fannie Mae COVID-19 Forbearance Script for Servicers
- Freddie Mac COVID-19 Forbearance Script for Servicers
Do I need to repay skipped or reduced payments from the forbearance period?
Yes. The method of repayment varies depending on your loan and the options offered. Not all borrowers will be eligible for all options. Generally, repayment of reduced or skipped payments during forbearance occurs in one of four ways:
- Reinstatement – A lump sum payment at the end of the forbearance period. This is usually the least desirable option because most homeowner will not be able to afford a large lump-sum payment.
- Repayment Plan – Payments added onto existing monthly payments over a set number of months. This may be an affordable way for some homeowners to catch up on payments without extending the term of the loan.
- Deferment – Principal and interest payments added to the end of the loan as additional payments or as a lump sum. This is usually the preferred option, allowing homeowners to tack on the missed payments at the end of their loan. For example, if payments were deferred for 6 months, the loan would be extended for 6 additional months beyond the original maturity date.
- Mortgage Modification – The interest rate, term, or principal balance is adjusted to make your payment more affordable long-term. This option will likely only be offered to borrowers who have a sustained reduction in income.
Borrowers with conventional loans backed by Fannie Mae and Freddie Mac will not be asked to make a lump sum repayment for their COVID-19 forbearance, unless they can afford it. Their mortgage servicer will contact them about 30-days before the end of the forbearance plan to see if the temporary hardship has been resolved and discuss a variety of repayment options. If the hardship has not been resolved, the forbearance plan can be extended. If the hardship has been resolved, the servicer will work with the borrower to set up an affordable repayment plan. If the borrower has a sustained reduction of income as a result of the pandemic, the servicer will look at modification options (changes to the terms of the loan) that might suit the borrower’s new circumstances and reduce their original monthly payment amount.
What if I have a mortgage that is not backed by the federal government?
If you have a mortgage loan that is not backed by one of the federal agencies and therefore not covered by the CARES Act, you should still contact your loan servicer. The Consumer Financial Protection Bureau and other financial regulators have encouraged all financial institutions to work with borrowers who are unable to meet their obligations due to COVID-19, even if the loan is not covered under the CARES Act. Your servicer has an obligation to help you identify alternatives that may be available given your specific circumstances. Many lenders have posted information about forbearance programs and resources on their websites. CPAH’s housing counselors are available to help as well.
What should I do after being approved for loan forbearance?
Once you secure forbearance or another mortgage relief option, ask your servicer to provide written documentation that confirms the details of your forbearance agreement. Make sure that you understand all the terms.
While you are in the forbearance period, or working under another mortgage relief option, there are several things to do to protect yourself. This advice applies to both a CARES Act forbearance and other mortgage relief that you might receive:
- Keep written documentation on hand and ensure that your monthly mortgage statement reflects the agreement / assistance provided.
- Continue monitoring your monthly mortgage statements every month to make sure there are no errors.
- Stop or change auto-payments for your mortgage. If you are having your mortgage payment deducted automatically from your bank account, make sure you make any necessary adjustment to avoid fees or charges.
- Once your income is restored, contact your servicer and resume your payments.
- Your property taxes and insurance should continue to be paid if your mortgage has an escrow account, but you may want to confirm with your servicer. If your mortgage does not have an escrow account, you will be responsible for these payments.
Will forbearance impact my credit score?
Mortgage forbearance is a postponement of obligations, which should not damage borrowers’ credit scores even if loan servicers continue to report the status of the mortgage to credit bureaus. Any missed payments before the start of the forbearance period, however, do weigh down credit scores. However, keep an eye on your credit. It’s a good idea to routinely check your credit reports in order to make sure there are no errors or inaccuracies. If you stop making mortgage payments without a forbearance agreement, the servicer will report this information to the credit reporting companies, and it can have a lasting negative impact on your credit history. If an error has been made, however, you can work to dispute it. More information is available about protecting your credit during the coronavirus pandemic.
While suspending mortgage payments avoids delinquency in the eyes of credit reporting agencies, it does count as a gap in payment from an underwriting standpoint. One potential impact is a temporary inability to refinance a home loan or obtain a new mortgage.
What if I can’t resume my mortgage payments at the end of the forbearance period?
If you do not think that you will be able to resume your mortgage payments at the end of the forbearance period, contact your mortgage servicer before the end of your forbearance period. It is important to always work with your servicer and keep them informed; they may be able to help you longer term. Additional information is available in the Homeowner’s Guide to Success. CPAH’s HUD-Certified Housing Counselors can also provide free Foreclosure Prevention Counseling and discuss the Lake County Residential Foreclosure Mediation Program.
Are there things I should look out for?
Yes, watch out for scams! Scammers often take advantage of vulnerable consumers during disasters and financial shocks. In addition to coronavirus-related scams, be aware of scams that falsely promise financial relief from your mortgage loan, or from foreclosure.
Here is what to watch for as scammers may:
- Charge a high up-front fee for their services
- Promise to get you a loan modification
- Ask you to sign over your property title
- Ask you to sign papers you don’t understand
- Tell you to make payments to someone other than your servicer
- Tell you to stop making payments altogether
- Promise you payments in connection with providing credit card numbers and other personal information