Mortgage forbearance is one of several options being offered to help Americans suffering as a result of pandemic control measures. Forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.”
The Mortgage Bankers Association reports that requests to delay mortgage payments grew by 1,270% between the weeks of March 2 and March 16, and another 1,896% between the weeks of March 16 and March 30.
Forbearance terms can vary, and borrowers should make sure they understand what their loan servicers will require. Some servicers are offering to tack deferred payment amounts on to the total loan balance, while others are requiring deferred payments to be made in a structured plan at the end of the forbearance period.
Forbearance is not a deferment on your payments. Deferments are payments owed with no interest accruing that can be capitalized into your loan by extending the maturity or loan amount. This process must go through a loan modification and must adhere to the regulations set forth by the investor and/or insurer of your loan (i.e. FNMA, FHLMC, FHA, VA, USDA, etc…). Your mortgage servicer acts simply as a facilitator to assist you in qualifying and executing said modification/deferments.
Although terms can vary, borrowers need to be aware that forbearance does not erase the amount you owe on your mortgage. You will have to repay any missed or reduced payments. Interest does not stop accruing on a forbearance.
Make sure to talk with your mortgage lender to understand your options. GO Mortgage is continually monitoring for any changes that would impact the assistance we may be permitted to offer customers. Times like these, we understand people may need help, please reach out to us if you have any questions.