Need a forbearance extension? Here’s what to do

The persistent pan- rary suspension of required demic has taken a mortgage payments – for up toll on Americans in to 180 days. countless untold ways. For The problem is, those six many, lost wages and medical months have expired or will expenses related to COVID soon for many borrowers are particularly consequen- who earlier pursued forbeartial, making it tough to ance. They’re worried about pay the bills, including the monthly mortgage. Fortunately, many financially struggling homeowners have been able to take advantage of mortgage forbearance protection allowed under the what will happen next or if they have any options to pursue. Thankfully, they have choices, including the option to extend forbearance protection for an additional 180 days.CARES Act passed by Con- “Most forbearance plans gress last March. This will are expiring now, or have enable borrowers of federally recently expired because backed mortgages, includ- borrowers have reached the ing Freddie Mac, Fannie six-month deadline where Mae, VA, FHA, and USDA they either have to file for loans, to request mortgage an extension or let their forbearance – the tempo- forbearance expire,” says Nishank Khanna, CFO of you’re not ready to start mak- the forbearance by phone or Clarify Capital in New York ing payments again, con- in writing and state that it’s City. “In fact, about 1 mil- tact your loan servicer and due to a COVID-associated lion plans were set to end in communicate this, recom- hardship,” she says. But KhiOctober 2020.” mends Thomas O’Connell, rallah states that it is always Rachel Khirallah, a foreclo- senior vice president, Default best to have it in writing. sure attorney in Dallas, says Management, for Planet Most importantly, don’t wait forbearance plans under the Home Lending in Meriden, until the last minute or your CARES Act were intended Connecticut. expiration date to get a hold to be a temporary resolution “First, check your servicer’s of your loan servicer. to those whose income was website; there’s probably a “You want to make sure you impacted by COVID. COVID-19 message right allow enough time to discuss “The CARES Act, which on the homepage with your financial situation with provides forbearance plans to directions for asking for an your lender and review your any qualified borrower who extension on your forbear- options,” Khanna suggests. requests it, only makes this ance or for other loss mitiga- Keep in mind that not all plan available for 180 days tion assistance,” O’Connell mortgage lenders/servicers for those who demonstrate a explains. will provide or allow a coronavirus-related hard- Khirallah adds that forbear- forbearance plan – only ship,” she says. “But eligible ance allowed under the government-backed mortborrowers can request a 180- CARES Act shouldn’t involve gages are required to do so. day extension.” completing and submitting “The good news is that If your forbearance plan any special documents. many privately backed is nearing expiration, and “You simply need to request mortgages are voluntarily RE-Weekly

granting forbearance, too, so don’t be afraid to ask,” says O’Connell, whose company is providing forbearances in 90-day increments and granting forbearance extensions to eligible customers. Note that if your mortgage is not federally backed, you may be required to complete a forbearance application and provide documentation to evidence your hardship. Remember, too, that forbearance doesn’t forgive your debt obligation. “It simply sets it aside until a later date. Each month, your loan statement will indicate how much your outstanding debt is,” O’Connell notes. “Keep an eye on that balance so that you’re not surprised later by how much you owe.” Once you’re back on a firmer financial footing, you can pursue several routes for repaying your skipped payments. O’Connell says the most common four options are: Immediately repay what you owe all at once in a lump sum. Modify your loan to make up for the missed payments; this might include changing your interest rate and/ or extending how long your mortgage lasts. Defer your payments. “You may be able to tack the missed payments onto the end of your loan. Or, you can agree to have a balloon payment due at the end of your current home loan,” says O’Connell. Enter into an extended repayment plan in which you pay more each month, typically over a year or so, to make up your missed payments. The bottom line? “If you need help, ask for it. That’s what forbearance is all about,” insists O’Connell. “Contact your loan servicer, who can walk you through your options.”