As the world entered the COVID-19 pandemic in 2020, many homeowners struggled to keep up with their mortgage payments. In response to the economic impact, mortgage lenders across the United States and the Fed offered forbearance programs to help homeowners navigate these uncertain times.
However, as we move out of the COVID-19 pandemic and return back to a sense of normalcy, many of these forbearance programs are coming to an end.
What is a Mortgage Forbearance?
First, let's define what a mortgage forbearance is. A forbearance is an agreement between a homeowner and their mortgage lender that allows the homeowner to temporarily pause or reduce their mortgage payments.This can be helpful for homeowners who are facing financial difficulties, such as job loss or reduced income – or in this case, a pandemic.
The CARES Act, which was passed in March 2020 in response to the COVID-19 pandemic, provided additional protections for homeowners who were struggling to make their mortgage payments. Under the CARES Act, homeowners with federally-backed mortgages, such as those backed by Fannie Mae, FreddieMac, or the FHA, could request a forbearance of up to 180 days, with the option to request an additional 180 days if needed.
Why Are Forbearances Coming to an End?
Forbearances provided by the USDA, HUD, and FHA due to pandemic-related financial hardships will now end on May 31, following the White House's decision to end the COVID-19 national emergency. The emergency was terminated several weeks before its scheduled expiration on May 11.
“As the National Emergency may end earlier than originally expected, USDA has determined that a short period beyond the expiration of the COVID-19 National Emergency would be beneficial to both USDA borrowers and servicers,” USDA said. “The USDA is extending the date by which a servicer may approve a borrower’s request for an initial COVID-19 forbearance.”
Some housing relief provisions have already been phased out, but a few have been extended to help borrowers and mortgagees. HUD specifies that no COVID-19 forbearance period may extend beyond November 30, 2023.
Of course, this timeline may vary depending on your specific forbearance agreement and your mortgage lender. If you're unsure when your forbearance will come to an end, it's important to contact your lender as soon as possible to find out.
What Happens When Your Mortgage Forbearance Ends?
When your forbearance period ends, you will be responsible for resuming your regular mortgage payments. Depending on your specific forbearance agreement, you may be required to make a lump sum payment to catchup on any missed payments, or you may be able to resume your regular payments and have the missed payments added to the end of your loan term.
It's important to note that if you're not able to resume your regular mortgage payments when your forbearance ends, you may be at risk of foreclosure. If you're struggling to make your mortgage payments, it's important to reach out to your lender as soon as possible to discuss your options.
What Happens If You're Still Struggling with Mortgage Payments?
If you're still facing financial difficulties and are unable to make your mortgage payments, there are still options available to you. Your mortgage lender may be able to offer you a loan modification, which can help to reduce your monthly mortgage payments or adjust the terms of your loan to make it more affordable.
You may also be eligible for other types of assistance, such as state or local housing assistance programs. These programs can provide financial assistance to help you stay current on your mortgage payments and avoid foreclosure.
If You Still Need Help
Team Neilsen and Movement Mortgage are both committed to helping homeowners navigate any hardships they may be facing. If you're a homeowner who is facing financial difficulties, we encourage you to reach out to us to discuss your options. We may be able to offer you a loan modification or other types of assistance to help you stay current on your mortgage payments and avoid foreclosure.
As the world continues to move out of the pandemic, we want to remind homeowners that there is still help available. If you're unsure when your forbearance period is coming to an end, or if you need assistance making your mortgage payments, don't hesitate to contact us for help and support.
