Forbearance Option Available For Financially Distressed Homeowners

Historically high unemployment brought on by the coronavirus pandemic forced many homeowners to put the brakes on their mortgage payments. Under normal circumstances, not paying your loan would put you into delinquency, which damages your credit score and eventually results in your lender foreclosing on the property. Fortunately for homeowners in financial distress, these are not normal times.

Lenders grant forbearance to borrowers

Legislation pushed through Congress at the start of the pandemic allowed lenders to automatically grant forbearance to borrowers who were unable to pay their mortgages. The initial forbearance period was for up to 180 days.

Many borrowers welcomed the opportunity to defer paying their mortgage even though it meant the missed payments had to be repaid once the forbearance ended. It now appears that the number of homeowners taking advantage of forbearance for the first time has dropped, and few of those who opted to suspend payments applied to extend the forbearance period beyond the initial 180 days.

Taking the sting out of forbearance

The uncertainties of the coronavirus could mean another round of government-ordered measures in response to it, which could force more homeowners to suspend payment of their mortgages. As long as it is an available option, taking advantage of the opportunity to place their mortgage payments on hold should not be discounted by borrowers in financial distress.

A way to take the sting out of catching up on missed payments after forbearance ends is by paying something while payments are suspended. Payments made during forbearance will reduce what is owed.

MortgageDepot can help

Interest rates at all-time lows make this a good time to refinance a mortgage or purchase a new home. Learn about the options available by visiting MortgageDepot.com.

Contact one of our loan consultants to learn more about this program.