What is payment deferral during COVID-19?

Peggie Simmons

WHAT IS PAYMENT DEFERRAL DURING COVID-19?

The Coronavirus pandemic has caused financial distress to millions of individuals across the United States. With unemployment rates staggering at 20 percent, which is an all-time high to be witnessed ever since the great depression, millions of families are facing financial hardships during this crisis. According to recent research by the Pew Research Center, nearly half of the Americans today consider the pandemic to be one of the major threat to their financial freedom, and it makes much sense because between March 15 and April 4, nearly 17 million people in the country filed for the Unemployment benefits.

In response to the struggling homeowners, the government ha provided several mortgage relief options, and among them is the payment deferral during this crisis. However, nor so many people understand what a payment deferral is, or how they stand to gain from it.

While one of the most common options for the homeowners is the forbearance, homebuyers and homeowner are being offered with a payment deferral option once they have resolved their COVID-19 related hardship. WHAT IS COVID-19 PAYMENT DEFERRAL? It was just announced recently as an assistance program for the homeowners who are already suffering from the COVID-19. The Payment Deferral solutions return as the homeowner’s monthly mortgage payment to its preCOVID amount by adding 12 months of missed payment at the end of their mortgage period. It could be less than 12 months, but it cannot exceed 12 months.

It is important to note that for the deferral period, the amount accrued will not carry any interest to the borrower. “This will ensure your mortgage is current once you are back on your feet and when other options, such as a repayment plan, are not feasible.”

HOW DO YOU KNOW IF YOU ARE ELIGIBLE? Starting July 1, 2020, the COVID-19 Payment Deferral will be available to the homeowners with Freddie Mac loans. During this time, your loan servicer will begin evaluating your eligibility for the program. “Your servicer will contact you about 30 days before the initial forbearance plan is scheduled to end to determine which Freddie Mac assistance program is best or if additional forbearance is needed.”

How will the COVID-19 Payment Deferral Affect your mortgage payments “With the COVID-19 Payment Deferral, you essentially return to making your regular mortgage payments, and the maturity date, remaining term, interest rate, and payment schedule will remain unchanged once you do so. The deferred payments will be due at the end of the loan, such as when your loan is paid off, refinanced, or your home is sold. Payment deferral will not prevent you from being eligible for a Freddie Mac modification if mortgage relief is needed in the future.

If you are experiencing financial challenges due to COVID-19, contact your loan servicer – the company that you send your monthly mortgage payments to – so you can explore which of Freddie Mac’s workout options is best for your situation.”

ARE FORBEARANCE OR PAYMENT DEFERRAL OPTIONS GOOD? Entering into a forbearance agreement with a mortgage lender at this time will not affect your credit score or how the lender reports to the credit bureaus. Part of the CAREs Act amends a section of the Fair Credit Reporting Act. This amendment asks the lenders to report that borrowers are ‘current’ on their credit obligations when a special payment accommodation like deferral or forbearance is in effect. But, if you are in a position to continue making your payments, you should. Remember, forbearance or deferral does not mean that your loan is forgiven; you will still have to cover these loan amounts in the future.

Additionally, if you enter into a forbearance agreement with your lender, you must review your credit report often. Do not assume that the lenders will be faithful to the new guidelines; you need to verify that your lender is indeed following the new guidelines and that your account is current. If you would like to know how you can qualify for a forbearance or Payment Deferral, talk to Peggie Simmons.

Peggie Simmons has 34 years’ experience as a real estate agent and broker in Tempe, Arizona, and currently serves as the Founder and CEO of Realty Marketing Group specializing in relocation, new homes sales, traditional homes, marketing & sales, short sale negotiations, foreclosures, luxury rentals, investments among many others. Peggie has a heart of gold, boldness, and unbridled enthusiasm that drives her passion. She has been a resident of Arizona since 1983, which makes her the perfect choice and your go-to real estate agent in Arizona. She is an Accredited Buyer Representative (ABR), a Certified Residential Specialist (CRS), a Multi-Million Dollar Producer, a Certified Short Sale Property Expert (CSSPE), and a Certified Distressed Property Expert (CDPE), all of which means you will be dealing with a highly qualified professional who knows what she is doing. To learn more about Peggie, follow this link https://thepowerisnow.com/peggiesimmons/

Sources

http://www.freddiemac.com/ blog/homeownership/20200514_ understanding_payment_deferral. page https://www.forbes.com/sites/ advisor/2020/04/16/covid-19- mortgage-forbearance-whatto-know-before-you-delaypayment/#13e69f003481