What to Do If You Can’t Make a Mortgage Payment
During the last couple of weeks millions of people have lost their jobs due to the current COVID-19 crisis, which will make it difficult to keep up with their financial obligations including their mortgage payment. It is safe to say that a lot of people are afraid of losing their homes to foreclosure.
For some people it might be tight, but if you are able to make your mortgage payments, please keep on making them.
The home owners who can’t pay, need to call their lender or servicer a soon as possible and learn about their options during this Coronavirus pandemic. The great news is that most lenders and servicers are giving some type of emergency mortgage payment relief due to COVID-19 (coronavirus) unemployment victims.
Here’s the type of help your lender may be able to provide
Short-term payment relief. If you are experiencing a financial crisis due to the pandemic, your lender may have the option to temporarily pause your mortgage payments, this is called a forbearance.
If you qualify for a forbearance your lender may pause your payment for 3 months to 12 months. It all depends on your situation and your lender.
While forbearance may be a great option to help you through this crisis, remember, once your forbearance is over, any paused payments will need to be repaid. Your lender should work with you to find a payment solution that works for you.
What happens after a forbearance? At the end of your forbearance period, all payments not made during the forbearance period will have to be paid back. Lenders realize this will probably be a big financial burden, so some lenders have options to handle this which is why you’ll have a few options for how to handle it:
- Pay it as a lump sum — If possible, the simplest option is to pay back the amount owed as a lump sum and pay off the amount you owe at one time. In some cases, there may be an option to pay it back at the end of the loan term.
- Start a repayment plan — Over a set number of months, an extra amount will be added to your regular mortgage payment to cover the amount you owe from the forbearance.
- Loan modification —With some lenders if you are unable to pay a lump sum, they will work with you on a loan modification. This will most likely change the structure of your loan (interest/term) in order to make it possible for you pay back the amount owed due to the forbearance over the term of this new loan.
Note: Please don’t stop making your mortgage payments until you’ve been approved for a forbearance plan. These programs are not payment forgiveness programs. They’ll require any paused payments to be repaid, so save these options for when you need them most.
Why Forbearance and Not Payment Forgiveness
I know that some announcements in the news may have led you to believe that your mortgage company can waive your upcoming payments or offer payment forgiveness, just understand that they can’t do that.
A mortgage servicer collects payments on behalf of major mortgage investors like Fannie Mae, Freddie Mac, FHA, VA, USDA, and others. In times of crisis, like the one we’re in now, they are contractually obligated to continue making payments to these investors, even if homeowners are unable to pay their mortgage. During this COVID-19 crisis, the major mortgage investors are offering forbearance as an immediate relief option for homeowners who need assistance.
Aldo Gonzalez
Realtor | Broker Associate
818-602-8417
Messenger: m.me/homesbyaldo
Facebook: FB.com/homesbyaldo
Instagram: instagram.com/homesbyaldo
