What is forbearance? How does it work? One thing it is not is mortgage payment forgiveness, or a loan modification or deferment. Typically at the end of a forbearance all accrued payments not made need to be repaid, in lump sum, all at once. This can create an additional hardship.
If a homeowner is wanting to utilize the forbearance option here are four questions they need to ask their mortgage loan servicer, be prepared to be on hold for a few hours:
- If you need forbearance, do you have to apply for it?
- What is the maximum period of time the forbearance is good for?
- What are the repayment options for the accrued forbearance (very important)?
- Once I’m able to resume making payments how do you cancel forbearance?
Paying the owed forbearance chunk back in a lump sum may be too much for many to handle and each lender may have a different view on how to solve that problem. You need to know what option(s) they have in place to pay back the accrued forbearance payments, before you start the forbearance.
If at all possible, if you are able to use the forbearance option, be careful, only skip mortgage payments as a last option.
I hope you and your families are healthy and hanging tough, be vigilant, this in time will pass.
Be well,
Kevin Walton