The Times Herald (Norristown, PA)
Is mortgage forbearance an option?
Here’s what you need to know
Suddenly out of work or making due with reduced paychecks, an estimated 4.1 million Americans have sought forbearance on their mortgage, according to data released Monday by the Mortgage Bankers Association. That’s a staggering number, and experts anticipate more homeowners will seek this protection as the economic impact of the coronavirus wears on.
A forbearance hits the pause button on mortgage payments. As part of its massive economic rescue package for the economy, Congress made it easier for homeowners to enter a forbearance plan and regain their financial footing.
Still, there are considerations for homeowners. Eventually the money must be paid, and homeowners with federally back loans have some advantages over those with private mortgages.
Here’s what they should know:
How do i obtain a forbearance?
If you feel forbearance is your best option, you need to know which company services your loan and which company owns it. They’re not always one and the same.
The servicer is the company you make your payment to and get monthly statements from. You can typically find information on forbearance at the servicer’s website and can start the process there. If necessary, you can look up your servicer by searching the
Mortgage Electronic Registration Systems website.
Who owns the loan plays a role in what relief options are available to you.
About 70% of all mortgages are federally backed, according to the Urban Institute. That includes loans through the U.S. Department of Agriculture, Federal Housing Authority, the Veteran’s Administration, as well as those held by organizations such as Fannie Mae and Freddie Mac. The remainder have mortgages held by banks or other private investors.
You can often find this information online, on your statement or by calling your servicer, which must provide you the information they have on file.
What happens during a forbearance?
Forbearance allows homeowners to suspend mortgage payments for a designated period of time. The payments aren’t forgiven; they must be repaid later. Some servicers may also offer a reduced payment during this period instead.