With everything going on during this unpredictable time, we’ve had a lot of questions about Forbearances & other mortgage options to assist in relieving monthly financial burdens as we all work to get through this.
If you or someone you love is considering requesting a mortgage forbearance, please make sure they ask the mortgage servicer & understand ALL of the details to avoid any oversight or assumption surprises.
Mom and Dad have a mortgage.
It’s currently $2,000 per month.
Dad gets laid off, calls the servicer, and asks for forbearance.
In one phone call, he gets 6 months “off” from paying.
Seven months later, Dad is finally back to work, and hasn’t been able to save any money during the forbearance.
Forbearance is lifted and servicer says,
“That will be $12,000 + $2,000, which is now due”. ($14,000)
Dad almost passes out and asks, “WHY??”
Servicer: “That’s the 6 months of forbearance plus the current month.
Dad: “I can’t do that, can we work something out?”
Servicer: “Sure, we will spread out the $12,000 over 12 months.”
Dad: “Phew….ok, good. What will that look like?”
Servicer: That will be $3,000 a month for the next 12 months.”
Dad: ” OMG!!! I can’t afford that.”
Dad: “Can I refinance?”
Servicer: “No because the loan went into forbearance.”
This is just one example of Forbearance.
There are others, depending on the servicer, so make sure you review your own terms. Some plans will work great, some will not. Other options will include Loan Modification (affecting your credit) or deferment (affecting interest paid).
In a nutshell – Forbearance is not Forgiveness.
Please understand the seriousness of this, you deserve an informed decision and if you still have questions, our team is always here for you.