Homeowners who are now in a tough financial position due to the COVID-19 pandemic have the opportunity to delay or reduce their mortgage payments for up to a year. Through what is known as a forbearance period, loan servicers can now suspend payments for up to 12 months on mortgages backed by Fannie Mae and Freddie Mac for homeowners who have lost income due to COVID-19. The delay or reduction of payments will excuse penalties and late fees that would otherwise be held against borrowers and will not be reported to credit agencies.
This relief applies to all property types, including primary homes, secondary homes and investment properties. Fannie Mae and Freddie Mac have the ability to reevaluate a borrower’s ability to make their mortgage payments during the delay period to ensure that the plan is still needed. Once the forbearance period has ended, mortgage servicers can make an affordable repayment plan with the borrower, and this can include extending the term of the loan.
It’s important to understand that not every mortgage servicer handles mortgage relief programs the same way, however. Call your mortgage company, ask questions and learn about the forbearance policy. You may need to call the mortgage company every month to be approved, so make sure your follow-up plan is clear. If you are able to pay your mortgage, please do. Do not skip any payments until you speak with your mortgage servicer. Forbearance may mean something different to your servicer, so be sure to ask if you can defer payment that will be added to the end of the loan. It’s possible you will need to pay the missed payments in a lump sum once the forbearance period has ended.
To become eligible, homeowners must contact their mortgage servicer to let them know that they are struggling and speak with them about their options.
