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Several important forbearance and foreclosure measures for homeowners were recently extended.
Now, millions of homeowners with federally guaranteed mortgages have the option to extend their forbearance for another six months, and the deadline for the federal moratorium on foreclosures has been extended to June 30, 2021.
These COVID-19 protections apply to 70% of existing single-family mortgages, including the 2.7 million homeowners who are currently forborne, according to a statement released by the White House.
Tolerance gives homeowners who are experiencing financial difficulties the ability to put their monthly mortgage payments on hold without hurting their credit score or paying penalties. If you are eligible for forbearance, your options will vary a bit depending on the type of loan you have. “The dates [for forbearance] vary depending on who owns your loan and when you got your initial forbearance, ”says Urban Institute senior research associate, Karan kaul.
If you’re having trouble making your mortgage payment, contact your loan manager. Even if you don’t have a federally guaranteed mortgage, your loan manager may have forbearance options available to you.
In addition, with these new rules, you will not be automatically abstained or you will not be automatically extended. It is therefore important to speak with your loan manager. “If you have any difficulties, call your repairman up front,” says Federal Housing Finance Agency press officer Raffi Williams. Speaking with your loan manager will help you understand all of the options available.
Here’s what you need to know about your options for getting in and out of forbearance.
Mortgage forbearance options
The new forbearance and foreclosure periods only apply to loans guaranteed by a federal agency, Fannie Mae or Freddie Mac. If you have a private mortgage, these moratoriums will not apply to you. But many private lenders offer forbearance, so call your loan manager and even ask if you don’t have a government guaranteed loan.
Keep in mind that you can still have a loan that qualifies for forbearance even if you have a private lender. If you’re not sure what type of mortgage you have, call your loan manager. You can also use the Fannie Mae or Freddie mac tools for finding your mortgage, but these tools will not include USDA loans, FHA loans or VA loans.
If you’re not sure what options are available to you, here are the updated deadlines for requesting COVID-19 forborne for each type of mortgage.
|Type of loan||Deadline to request abstention from Covid||Maximum length of Covid tolerance||Foreclosure moratorium|
|FHA loan||June 30, 2021||Up to 18 months||Until June 30, 2021|
|VA loan||June 30, 2021||Up to 18 months||Until June 30, 2021|
|USDA loan||June 30, 2021||Up to 18 months||Until June 30, 2021|
|Freddie mac||February 28, 2021||Up to 18 months||Until June 30, 2021|
|Fannie Mae||February 28, 2021||Up to 18 months||Until June 30, 2021|
While the deadline for the maximum 18-month forbearance against COVID-19 has already passed, loans guaranteed by Fannie Mae and Freddie Mac are still eligible for reduced forbearance. For initial forbearance requests made after February 28, 2021, you can only abstain for a maximum of 12 months.
If you have a VA, USDA, or FHA loan, you have until June 30, 2021 to request your initial forbearance. With these loans, if you are currently in forbearance, you may now be entitled to an additional six months of forbearance, in 180 day increments. These additional six months increase the maximum length of homeowners who are currently forborne to a maximum of 18 months. The foreclosure moratorium on these loans has been extended until June 30, 2021.
If you want to take advantage of these options, you will need to contact your lender directly.
Tolerance output options
When you’re ready to quit forbearance and start making mortgage payments again, you’ll need to contact your loan manager. There are a variety of ways out of tolerance. You probably won’t be forced to make a lump sum payment for all the payments you missed, although that is an option.
Other options for exiting forbearance include:
- Loan modification
- Deferred payments
- Repayment plan
“Most people will end up in what’s called a payment deferral, which puts missed payments at the end of the loan,” Williams says. These payments are due if your home is sold, refinanced, or if you reach the end of your current loan term. This is probably the easiest for many homeowners, especially if your income was only lost temporarily during the closing.
If you can afford the additional payments, you can set up a repayment plan with your lender. In this situation, you will pay more each month than your standard payment until you have made up the payments you missed during the forbearance period.
For those who are still struggling financially or who have had a permanent or long-term reduction in income, a loan modification may be the best option. “A loan modification is a permanent change in the terms of the loan,” Kaul explains. To change your loan, you’ll work with your lender to adjust your repayment term or interest rate to lower your monthly payment.