Exiting the Forbearance Plan…. what’s next?
In the spring of 2020, as Covid hit and became a Global pandemic, it brought a loss of lives and an immediate change and disruption to the entire world. Yet on the upside, it restored union, perseverance, and to most, an awakening of what is most valuable. As the government placed a national lockdown, permanent business closure and job loss contributed to uncertainty. While our government passed bills to aid the national chaos and prevent a real estate crisis in our industry, they adopted the “Cares Act” known as the forbearance plan. The CARES Act bill was a temporary solution to post pone payments until homeowner’s returned to their job/businesses or got re-hired and overcame this unforeseen crisis.
Many of my clients who own their home have reached out and asked, “my payment deadline is due, what do we do next?” The first thought that comes to mind and backed by evidence currently listed by the US Department of Housing and Urban Development is ‘forbearance’ which is a temporary postponement or reduction of mortgage payments but it is not payment forgiveness. The Covid National Emergency has been extended yet will eventually cease. After that point, you have six months thereafter to repay the entire sum of your missed payments.
In my opinion, you have four opportunities to remedy your forbearance situation:
The first option is to pay the outstanding missed payments on your mortgage which is the lenders and governments goal to get every mortgage back on track.
The second option is to attempt a refinance and not extend your loan term. In most cases, the lender will inquire about your credit, employment verification, and taxes filed. Additionally, if you are refinancing with the same lender, some of these requirements and/or costs may be waived.
Thirdly, negotiate with your lender/loan servicer and extend the life of your loan. This option is not available with all lenders, and depends on your type of loan - FHA, VA, Conventional, etc.
Lastly, an analysis of your home valuation, especially if you are struggling to make “ends meet”. If you owe less than current market values, you can cash in. If you are upside down on what you owe; you can still sell as a ‘short sale’ a term used to sell your home with the lender’s approval at current market value. Carefully assessing your financial status and any equity can give your family a new beginning.
If you are concerned with your credit rating, a short sale is a much better option and a softer hit on your credit versus a foreclosure.
Currently, there are numerous options. Yet the most important one is not letting the temporary assistance end and lose your home due to indecision.
Hopefully this short blog can answer all, if not most, of your real estate questions regarding your options during these trying times. When you wish to start a real estate consultation to review the options and answer any of your concerns, I am always here to assist you.
Here for your next move!
Surelis Yanes, Broker
For further Information visit: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_21_160