Updates on mortgage forbearance

mortgage forbearanceMortgage forbearance sounds like a great deal! You can skip some of your payments and if you have lost your job, that can really help. However, there are issues that you may not be aware of if you sign up for forbearance. Recently I posted about the initial concerns and drawbacks if you consider forbearance. Since then, there have been some changes and we may see some more.

Initially, if you went into forbearance, you had to wait a year to get a new mortgage. Since then, Fannie Mae and Freddie Mac have both come out and said you need to have 3 months on time payments – a lot better than 12 months! From what I am hearing, you need to be performing under the repayment plan, not have missed any payments and have 3 months on time payments. If you went into a loan modification plan, you need to have completed the trial period successfully. The reason for any loss mitigation program has to be covid-19.

FHA, VA and USDA have not changed their requirements – they still want 12 months on time payments after the forbearance period is over.

Ideally you will not need to go into forbearance – that is still the best option. The payments that are missed still need to be paid back, it may show on your credit report as “forbearance” in the remarks section even if all the payments reflect as on time. If you are trying to decide whether to go into forbearance or if there is another option, check for all other options first. The CARES act does allow for hardship withdrawals from 401K retirement plans and you have up to three years to pay any taxes that are owed. Talk to your tax accountant or retirement professional before making those decisions.

Leslie Vanderwerf,  NMLS ID#335509, Everett Financial Inc, dba Supreme Lending, An Equal Housing Lender, NMLS#2129 – Email – Website

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Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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