Mortgage Forbearance Explanation and Warning
Hi, my name is Steven Hook and I have been in real estate lending since 1990. My number is 415-260-9376.
The Covid-19 Coronavirus has led to some challenging times for all of us. Maybe you have read this already from other mortgage professionals, but I am hoping to take this to the next level.
As my wife told me this morning in regards to Forbearance, “this is not Christmas”. In other words, your loan is not being forgiven, nor is the loan going into Deferment.
To back up a few steps, the Government has created the CARE Act, to assist homeowners whose income may have been adversely impacted by the coronavirus. One of the components of the CARE Act is the possibility of mortgage forbearance.
Here is a YouTube video from the CFPB to provide some more clarity: https://youtu.be/br5EPugsnLs
Forbearance is often misinterpreted. And while it is intended to help, it can have some dangerous repercussions. Many people are mistakenly thinking that forbearance equals forgiveness. It does not.
Forbearance means that the payments will be suspended for a short period of time, initially up to 6 months, but will need to be caught up when the forbearance period is over.
Think about when you buy something at a furniture store that offers “no payments” for 3 months. You still must pay for the furniture…the payments are just deferred.
If your monthly mortgage payment is $3K, then with a 3 month forbearance, that means after 3 months, you now owe 4 months of payments or $12K. A 6 month forbearance means you will owe 7 months or $21K.
A few questions to ask yourself:
1) Will you absolutely have those monies in the future to pay the lender?
2) What about Property Taxes and Fire Insurance?
3) Are these bills included in your payment or paid separately?
Please call me to discuss your situation. My number is 415-260-9376
But mortgage forbearance is even worse if the borrower has dug themselves in a deep hole and can’t catch up. Should this happen, the lender will enforce their right to be paid, which may cause the borrower to be foreclosed upon. They could lose all the equity in their home in the process.
Forbearance is designed to help those as a measure of last resort. It is not a free pass and may have serious consequences. I cannot emphasize this enough.
Depending on your situation, I may be able to help by eliminating your debts, lowering your payment, and giving you a cash cushion during these turbulent times.
Please call me, Steven Hook, today at 415-260-9376 to confidentially discuss your scenario and see how I can help.