Are you seeking forbearance on your

Are you seeking forbearance on Your Mortgage? WATCH OUT FOR THESE RED FLAGS

Ruby Frazier

For distressed homeowners, forbearance is an option you’d like to try out. Forbearance is when your mortgage servicer or the lender allows you to pause or even reduce payments on your mortgage for a limited period. What you should keep in mind, however, is that forbearance does not erase what you owe on your mortgage. Any missed payments on your mortgage will have to be repaid in the future. As such, if you can make payments on your mortgage, you should continue making them.

While most homeowners would welcome an opportunity for a break, there is a downside to mortgage forbearance. Unless you and your lender agree not to report the forbearance, any missed payments on your debts will be reported to the credit bureaus. However, mortgage forbearance is far less damaging to your credit score than a missed payment, and it will help you avoid foreclosure.

How does it work? First, you have to contact your lender. Lender requirements of your qualification may vary, and the type of mortgage you have will also help determine what options you get. If you qualify for forbearance, your lender will then set up a forbearance agreement, and the terms may include;

The length of the forbearance period The amount of payment required during the forbearance period Whether the lender will report the forbearance to credit bureaus How you’ll repay the lender after the forbearance period ends

Keep in mind that your loan will still accrue interest during the forbearance When forbearance period lapses, you will have to pay your lender back in accordance to the forbearance agreement. There are several ways to go about a missed payment. For instance, with a reinstatement, you can repay with a lump sum. Additionally, you can have the missed payments rolled up to your monthly payments. Last but not least, you can have the missed payments to the end of the mortgage, which ultimately lengthens its terms.

Supposing the forbearance period lapses, and still, your financial position and hardships persist, you can ask your lender for a mortgage loan modification. A loan modification will change the terms of your mortgage to help you manage your mortgage repayment.

IF YOU ARE LOOKING FOR A FORBEARANCE, WATCH OUT FOR THESE RED FLAGS.

Remember, you have to pay your mortgage No matter how long the period lasts, you should always keep in mind that forbearance is not forgiveness. “Forbearance is not forgiveness,” said Karan Kaul, a research associate at the Urban Institute, a left-ofcenter nonprofit policy group. “You still owe the money that you were paying; it’s just that there’s a temporary pause on making your monthly payments.” For the homeowners with federally-backed mortgages, you are eligible for up to 180 days initially under the CARES Act. At that point, if you are still experiencing financial hardships, you can request an extension of up to another 180days of forbearance. The good news is that the stimulus package stipulates that during the forbearance, the mortgage servicers cannot make any negative reports about the borrower to the credit bureaus. Additionally, borrowers also will not owe any late fees or penalties if they are granted forbearance. First, understand who your mortgage servicer is Just because your struggling doesn’t mean that your servicer will be too understanding; as such, to get a forbearance, you need to request it from your servicer. Mortgage servicers are the companies that are receiving your monthly payments. You need to understand that your lender may be very different from your servicer; therefore, do your homework. Most lenders sell their servicing rights for mortgages to other companies. If you do not want to lose eventually, as a first step, figure out who your servicer is and understand how they operate. To find out who your servicer is, check your mortgage statement, and if you can’t find their information there, look it up by searching the Mortgage Electronic Registration Systems Website. Your agreement should be in writing “Once you’re able to secure forbearance or another mortgage relief option, ask your servicer to provide written documentation that confirms the details of your agreement and that you’re clear on what the terms are,” CFPB said on its website. I cannot stress enough the importance of having such a deal in writing. This will protect you should there be any errors in your mortgage statement or your credit report. Be cautious of a balloon payment After you have successfully secured your deal in writing from your servicer, the next step is to know your repayment options. “You don’t want a surprise like finding out that six months of deferred loan payments are all due immediately upon the end of the forbearance,” Sharga said. “Most people simply won’t have six months’ worth of mortgage payments available.” Some of the options have been discussed in this article. However, some borrowers have expressed concerns after being offered a balloon payment option. With balloon payment, what that means is that the borrower will be required to pay back the entire amount owed for the forbearance period all at once. While this is one of the options, and the lender may offer it, a borrower is no under obligation to pay in that way. The homeowners should aim to negotiate the best possible repayment they are comfortable with. “All those terms are negotiable,” Sharga said. “Be diligent, be steadfast, and try and stand your ground.” I would urge you to continue making your payments if you can. And while it may give you a break, you will still have to pay the loan amount and the interest accrued. If you want guidance on how to go about the forbearance process, especially for homeowners in Riverside, talk to Ruby Frazier. Ruby is one of the most talented realtors in Riverside, and she is part of the VIP Agents program. A program run and powered by the Power Is Now Media. Find out more about VIP Agents program here. R uby is the President and CEO of Frazier Group Realty Inc., a full-service real estate company with a dynamic team. The company’s approach is tailored to each of our clients. Frazier Group Realty is located in the heart of Downtown Riverside, California, servicing the Inland Empire, Orange, and Los Angeles counties. Focusing on residential and commercial real estate as well as property management. Ruby’s objective is to assist buyers and sellers reach their real estate goals. To find out more about ruby, follow this link; https://thepowerisnow.com/vipagentsservices/ ruby-frazier/.

Ruby Frazier

President & CEO Frazier Group Realty

Sources

https://www.consumerfinance.gov/coronavirus/cares-actmortgage-forbearance-what-you-need-know/ https://www.consumerfinance.gov/about-us/blog/guidecoronavirus-mortgage-relief-options/ https://www.marketwatch.com/story/are-you-a-homeownerseeking-forbearance-on-your-mortgage-watch-out-forthese-red-flags-2020-04-10 https://www.nerdwallet.com/blog/mortgages/mortgageforbearance/