The maturity date for most forbearance extensions to The CARES Act are coming to an end. Homeowners have numerous options available to them, but they need to act before the forbearance maturity date.
The CFPB (Consumer Financial Protection Bureau) has outlined 4 options for homeowner's wishing to retain their homes at the maturity date of their forbearance. Earlier in '21 the Acting Director of the CFPB Dave Uejio encouraged mortgage servicers to get prepared for the "tidal wave of distressed homeowners over the coming months" when forbearance matures.
The CFPB's website offers the following recommendations to borrowers... "Generally, there are a few ways borrowers can make up their missed payments. However, the method of repayment can vary depending on your loan. Not all borrowers will be eligible for all options. Ask your servicer about what options are available to you." Their recommendations are below:
1) Repayment Plan - A portion of the amount you owe will be added to the amount you pay each month.
2) Deferral or Partial Claim - This option will either move your missed payments to the end of your loan or put them into a subordinate lien repayable only when you refinance, sell, or terminate your mortgage.
3) Modification - Your payment can be reduced to an affordable about in your missed payments will be added to the amount you owe. Your monthly payments could also be lower, but it could take longer to pay off your loan.
4) Reinstatement (Lump Sum) - For most loans, servicers cannot require you to pay a lump sum. So, if you only hear about a lump sum repayment, ask about other options.
These options may not work for all borrowers, so considering the current housing market, with home prices at all time highs, a homeowner's best option may be to sell their house, use the equity to cover their forbearance deficiency, salvage their credit and move on.
If you have questions about your specific situation, please reach out to Jerry Brightbill for a confidential consultation at (843) 609-1200.
For more information on forbearance check out our upcoming blogs.