Forbearance of Mortgage Payments – What Does it Mean for Me?

There has been a lot of talk lately about forbearance of mortgage payments.  Housing Wire recently discussed the topic and what is means for borrowers.  To get an opinion on the topic, we asked our friend and local mortgage loan officer, Marianne Washington with Movement Mortgage for her take.  Here is what Marianne had to say:

“If there is a job loss or income reduction in your home and you have exhausted all means to make your house payment, forbearance is a way to keep your home. While forbearance may be an option, it is vitally important you understand the terms you agreed upon – is there no obligation for three months and on the fourth month all past payments are due at once? Is the amount due added on the balance of your existing mortgage? What happens with the property taxes and home owners insurance premiums due while in forbearance? These are just a few of the questions needed to be asked.

But – it’s in your best interest if you have the ability to make your house payment you do. Lending guidelines require at the time of application payments on existing mortgages must be current. If you opted in on forbearance and want to refinance, or are selling your home with the intent to buy a new one, you may not be able to get a new mortgage. There are also guidelines on late/missed payments in the last 12 months for current mortgages. If you are in either of these situations it is best to talk to a lender and know where you stand before you do anything.

Federal Housing Finance Authority director Mark Calabria hopes that people who apply for forbearance actually need the help.

“We’re operating on the honor system,” says Calabria. “…  This is supposed to be limited to if you’ve lost your job, you’ve lost income. Please, if you haven’t lost your job, continue paying. If you can pay your mortgage please do so because we really need to focus on the people who can’t.””

 

Thanks to Marianne for taking the time to give us the real deal on this topic.  Be sure to contact her if you have any questions or are looking for a mortgage professional!