What You Need to Know

Borrowers should be aware that Forbearance is not forgiveness of debt. ​

Section 4022 of the Cares Act explains how lenders are to handle Borrower’s missed mortgage payments due to Covid-19. It is somewhat vague, and leaves quite a bit of gray area.

First and foremost, be aware that if you were previously behind on your mortgage, you aren’t automatically qualified for a forebearance, because you were already in distress prior to Covid-19. The good news however, is that due to the foreclosure and eviction moratorium, foreclosures were held off for a couple of months, and loans backed by FHA, Fannie Mae, and Freddie Mac have also been extended.

Fannie Mae, Freddie Mac, and HUD, Have all announced that they are still offering options and that your forbearance will not necessarily all be due and payable after the forbearance period ends. This may be true, however qualifying for a loan modification may be very difficult. You in essence are trying to re-qualify yourself for a loan you already have. Which means, you must now qualify for your arrears, PLUS your principal balance.

The idea of a loan modification can be rather deceiving, yet not surprising after what we saw what happened with banks and the secondary mortgage market in the crash of 2007/2008.

The other option offered to you may be a Deferred Balance, in which case you would have a 2nd mortgage through HUD placed on the title of your home for when you go to sell it, or pay it off. Or, they may write you a new loan for 40 years.

If you don’t know which Investor backs your loan, you need to contact your lender. Remember, if you were already delinquent, in pre-foreclosure and perhaps even had a foreclosure date, it is important to contact your lender to see where your foreclosure stands. Loans that were already delinquent prior to Covid-19 aren’t covered in the Cares Act. If you have a HELOC (Home Equity Line of Credit), or another loan that is not backed by FHA, Fannie or Freddie, you need to contact your lender, as those loans are rarely modified.

To Receive Mortgage Assistance Contact Your Current Mortgage Lender

You must immediately make arrangements with your Mortgage Company or Loan Servicer to be eligible for any assistance or options besides foreclosure. Ask the Mortgage Company to send you a loss mitigation application for modification options right away.

As far as Covid-19 , there isn’t a universal form specifically for Borrowers affected by Covid-19. Historically, there has always been a standard Request for Modification form for Government backed investors, such as FHA, Fannie Mae and Freddie Mac, for the Making Home Affordable Programs, HAMP, HARP and HAFA which have expired. This leaves for the loan servicers to use their own specific forms, and adhere to the guidelines set forth in the Cares Act, which is outlined in just a few paragraphs. You will likely fill out a Borrower Request for Assistance Form to send back right away along with your proof of hardship and financials.

Forbearance payments are not typically added to the back of the loan, rather it allows for a “Pause Period” for which the borrower cannot pay.

The entire amount of the Forbearance “Paused Payments” are usually due when the Forbearance Period ends. If you haven’t called your mortgage company and you’ve missed payments, again- you need to contact them right away. Don’t let your deliquencies stack up, as that could be a recipe for disaster.

If the Borrower cannot pay the full Forbearance amount, the Borrower needs to submit an application to their lender. The purpose of this is to see what amount the borrower will qualify to pay on top of their regular payment to pay back the forbearance.

In some cases, if the Borrower gets too far behind and the arrears stack up, the Borrower may not qualify to pay it back. At that point other loss mitigation options may be necessary, such as selling the home, short sale, deed in lieu of foreclosure (voluntary foreclosure), bankruptcy, or foreclosure.

Tip: If you had previously obtained a loan modification in the last 10 years is, check to see if you have an additional loan on your property.

Some modifications were handled with an additional note or deed to secure the deferred amount, which are actually a lien, in other words a cloud on title. Often times, Borrowers didn’t know exactly what they signed, they just wanted to keep their home. ​

If you had previously completed a loan modification through the HARP or HAMP program, check in with a title company, and they can get you a report very inexpensively. Article continues below…

There’s more in this article below, but be sure to subscribe for our Newest Updates on Covid-19 and your Mortgage

---

Article continues…

Although it seems that many homeowners have been able to obtain modifications or refinance, the damage is yet to be seen. We haven’t seen a situation of this magnitude since the crash of 2008, and are hoping that homeowners and mortgage companies are able to keep missed payment arrangements amicable. There will undoubtebly foreclosures that arise later down the road, however are hoping for the least amount of delinquent homeowners ending up in foreclosure as possible.

Always make your Mortgage payment if you have the ability to do so. Covid-19 should not be used as a freebie, because it could easily come back to bite you later.

---

Visit For More Information:

www.knowyouroptions.com

www.Hud.gov

---

Could Selling Be a Better Option?

If you don’t qualify for a Modification or Forbearance, don’t let your Equity go! You could be throwing away tens or hundreds of thousands of dollars in equity. We have specialized in Pre-Foreclosure and Distressed Property Sales in Seattle and the Puget Sound Region for over a Decade and have stopped hundreds of homes from going into Foreclosure. Some Homeowners received Modifications, and some decided to sell and walk away with hundreds of thousands of dollars.

---

---

Receive a FREE Comparative Market Analysis and Valuation

Contact Us Today 425-343-7581

In order to effectively know what your options truly are, you need a Comparative Market Analysis. What is your home worth? What are you at risk of losing? Should you keep trying to win a battle that is not avoidable? Know your options. You may be sitting on hundreds of thousands of dollars. Avoid losing thousands in Equity.

---

Already Facing Foreclosure?

If you are facing foreclosure and not sure what to do, you may likely be able to avoid it. If your lender will not work with you on payment arrangements, talk to a licensed Foreclosure Prevention Specialist today. You may need professional advice and assistance in options that may be readily available to you, free of charge. Yes, available options may include keeping your property. Time is of the essence in any pre-foreclosure situation. Quick Sales and Short Sales may also be an option in your case. Every situation varies and time constraints can grossly inhibit pathways.

Call Now for Free Foreclosure Prevention Assistance

---

---

Have a Question? Feel free to reach out.

Contact Us

---

Read More Articles

Debra Teal Real Estate Broker & Foreclosure Prevention Specialist
Seattle, WA | Coldwell Banker Danforth
425-343-7581 | Copyright © 2024 | All Rights Reserved

Disclaimer: This article shall be deemed reliable but cannot guaranteed, and is not intended as legal advice. Individual results may vary.