We will discuss some important things if you have a mortgage forbearance due to COVID. My name is Brian of Trusted House Buyers and today we explore forbearance due to COVID in San Diego real estate; thanks for watching.
The first question you may ask yourself is, now that we’re years beyond when COVID started, now what happens to folks like us? Well, many homeowners are have been and still are struggling to make mortgage payments as a result of the coronavirus pandemic. Here is information you can use, that includes ideas about your options and your rights. If you are facing money struggles, you are not alone, and Trusted House Buyers might be able to help. The last and final option might be the easiest for you to achieve and will relieve you of all the headaches of COVID forbearance.
We all know that COVID has impacted many families in many different ways, that is for sure. The majority of homeowners are eligible for forbearance for a coronavirus-related financial hardship. So let’s first discuss what forbearance is. Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited time while you regain your financial footing. Many individuals found themselves unemployed and unable to make mortgage payments during the pandemic. This is where the help comes in.
One major step you need to take if you find yourself in this situation, is you must request forbearance from your mortgage servicer. Taking this action now can help you avoid foreclosure and can pause mortgage payments while you pull through a difficult time. Having financial relief during stressful seasons would help lift a heavy weight off of a homeowner. Here at Trusted House Buyers, we recognize each homeowner has very specific situations and needs, and we are here to help ease any process related with non-payment.
So again, a first step is that you tell your mortgage servicer that you are going through a financial hardship due to COVID. Keep in mind a very important fact, they are not permitted to ask you for proof of hardship if you have a federally backed loan.
Now, let’s dive deeper into forbearances and how COVID has caused hardship and some things that are started to play out. For instance, what if a borrower exits forbearance but is re-impacted financially by COVID-19? COVID has lasted much longer than we all anticipated and many find themselves in a tricky situation when their forbearance plan has ended and they cannot resume their mortgage payments. The borrower must contact the servicer if a new forbearance plan is needed. You may be pleasantly surprised at what can be offered! There is never any harm in asking.
Now for those of you who have jumped on this opportunity early on, let’s discuss what happens when the forbearance comes to an end. There are still more options after a forbearance plan has ended and those include:
A first option is a simply Repayment plan. This is when a homeowner resumes making their regular monthly payments, plus an additional portion of the missed amount each month, until the missed amount is paid off. Oftentimes if you are coming off of a financial downturn, this may be hard to pull off.
Another option is: Reinstatement. The homeowner pays back any missed amounts at once if they are financially able to do so. After the reinstatement, the homeowner continues to pay their mortgage under the original terms of their mortgage loan.
Yet another option is: COVID-19 payment deferral
This is when a homeowner resumes making regular monthly payments. This solution allows the homeowner to defer the missed amount along with any servicing advances paid to third parties (for instance, taxes and insurance premiums) to the maturity date as a non-interest bearing balance. The deferred amount is due on the maturity date (or earlier whenever the home is sold, or the loan is refinanced or otherwise paid off).
Another viable option is: Refinancing. When a borrower exits forbearance and enters a loss mitigation plan, the borrower is eligible for a new mortgage loan after they make at least three timely, consecutive payments as of the note date of the new transaction. It is important to note that these three payments must be consecutive and may not be made as a lump sum payment.
A final option is from a lender is a Fannie Mae Flex Modification, of course if you have Fannie Mae Loan. If a homeowner has experienced a permanent impact to their ability to pay their regular monthly mortgage payment this may be an option. After the homeowner completes a trial period plan, all eligible unpaid amounts are added to the unpaid principal balance. Then, monthly principal and interest mortgage payments are permanently modified to what may be a lower amount. This option could definitely help a homeowner in need.
Here’s the bottom line: whatever your financial situation you have found yourself in post-COVID, be informed about each option and find the one that most suits your situation. One final idea that is the simplest, is to considering liquidating your home, no matter the condition. That’s where someone like Trusted House Buyers can help. We can offer you a cash offer, take your home as-is and close on your terms. For more information how we can help you avoid the troubles of an expiring COVID mortgage forbearance in San Diego, you can always call us at Trusted House Buyers by dialing, 619-786-0973.