- Payment deferral and partial claims. A portion or the entirety of your forbearance amount can sometimes be deferred to a maturity date as a non-interest-bearing balance. This means that your deferred forbearance amount will not collect interest until it becomes due on the negotiated maturity date. You may need to settle a deferred forbearance amount earlier if you sell, refinance, or otherwise pay off your home. Once the deferred forbearance amount is paid, you will resume making your regular monthly mortgage payments.
- Loan modifications. When lump-sum payments, repayment plans, or payment deferrals are not viable options, you may need to explore modifying the terms of your mortgage loan with your servicer. This will involve adding the forbearance amount into the revised mortgage terms. Loan modifications can involve new payment structures, changing interest rates, and extended mortgage terms so that the regular monthly payment amounts are affordable and sustainable.
- Combo plans. Servicers will sometimes allow for some combination of the above options. This might include paying a portion of your forbearance amount in a lump sum before incorporating the remainder into a repayment plan. It could also involve a loan modification on the condition that some of the forbearance amounts be paid upfront.
Irvine Loan Forbearance Attorney/Realtor
Professional Relief Guidance in Los Angeles, Orange, and San Diego Counties
When you suddenly lose your job or experience an abrupt rise in expenses, you may be fairly concerned about how you will make your regular mortgage payments. A serious injury requiring costly medical care or a natural disaster that results in substantial damage to your property can also leave you in a vulnerable financial position.
Many lending institutions and mortgage servicers offer forbearance options. This allows homeowners experiencing hardship to pause or temporarily reduce mortgage payments. Many have relied on forbearance programs to delay or reduce payments during the COVID-19 crisis.
It is important to understand, however, that forbearance does not erase or lower the total amount owed on your mortgage. You will eventually have to repay whatever payments were deferred, so it is important to have a plan for safely exiting a mortgage forbearance. Our Irvine loan forbearance Attorney/Realtor at Lawyers Realty Group has over 30 years of experience can provide the professional guidance that you need when navigating these difficult situations. We can help you understand your options and develop a strategy that will help you keep your home.
How Requesting a Loan Forbearance Works
If you have been regularly making your mortgage payments, obtaining mortgage forbearance is often relatively easy. In many cases, you need only speak to your servicer – the bank or lending institution that manages your payments – and inquire about forbearance options.
Typically, you will need to provide some explanation for why you are requesting forbearance. Common reasons include a sudden loss of income, an injury or illness requiring medical care, or a disaster like a flood, tornado, hurricane, or earthquake. Many were able to secure forbearance throughout the COVID-19 crisis if the state pandemic restrictions resulted in their being unable to work.
You should avoid entering a mortgage forbearance program without understanding how you will eventually exit it and resume regular payments. Many servicers will allow forbearance but will not inform homeowners of the terms, conditions, and caveats of delaying or reducing payments. This failure is a violation of federal law and you need and Attorney/Realtor to assist in securing your rights.
Safely Exiting a Loan Forbearance
Forbearance does not last forever. Most forbearance options last for 6 months with the ability to extend for another 6 months, but the CARES Act and other COVID-19-related legislation have allowed for additional extensions in some circumstances. Sooner or later, you will need to make up the missed or reduced payments. If you can't repay the missed amounts, you will need to seek a loan modification to allow for those payments to be addressed over time. This is not always possible, and the servicer does not have to agree to any modification.
As you consider whether to ask for forbearance, you may be wondering:
- Do I have to cure missed payments in one large lump sum after the forbearance period ends?
- Will my monthly mortgage payment amount change as a result of forbearance?
- What if I suffer a semi-permanent loss of regular income during the forbearance period?
- Will the delayed payments be counted as “late” and be subject to interest and late fees?
- What impact does forbearance have on my property taxes and insurance?
Our Irvine loan forbearance Attorney/Realtor can help you understand the implications of pursuing and exiting forbearance. We can assist you in negotiating with your servicer and explore all potential exit options.
Safe exit strategies for mortgage forbearance that we can help you explore include:
- Lump-sum payments. If you have available funds from savings, investments, a retirement account, or some other source, you can pay the entirety of the forbearance amount in a single transaction. After the forbearance amount is settled, you will resume paying your previous, regular monthly mortgage payment amount. For many, this option is not feasible. Note that California homeowners cannot be required to make a lump sum payment if their mortgage is held by a GSE, Freddie Mac or Fannie Mac.
- Repayment plans. Another arrangement involves augmenting your regular monthly mortgage payment with a portion of your forbearance amount. Increased payments continue until the entirety of the forbearance amount is settled, after which you resume making payments at your previous rate. These plans can vary wildly in length and amount and are often negotiable.
It is always advisable to plan ahead. You will need to contact your loan servicer to begin planning your exit strategy before your forbearance period ends.
If you are concerned about managing your looming forbearance amount, we want to help. Our Irvine loan forbearance Attorney/Realtor at Lawyers Realty Group can counsel and oversee your forbearance exit plan. Our number one goal is to protect homeowners and help you save your home. We have handled thousands of cases and can assist you in understanding all of your relief options.