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If you are currently in a mortgage forbearance program temporary helping you during a financial setback due to COVID-19, it is important to take a look at the type of mortgage loan you have and the date your agreement becomes due.
If you are currently in a mortgage forbearance program temporary helping you during a financial setback due to COVID-19, it is important to take a look at the type of mortgage loan you have and the date your agreement becomes due. If you are a homeowner who experienced a financial hardship during the pandemic and your temporary relief plan is coming to an end, this information will help you to know the options.
Data shows approximately four million U.S. homes went into forbearance in 2021. The number of forbearances has dropped around one million in 2022 according to RealtyTrac. There is a projection that another quarter of a million forbearances are to expire in 2022.
According to the Florida Department Economic Opportunity, there are an estimated 7.7 million homeowners in Florida, including those with mortgages in forbearance or are behind in mortgage payments, and those who have difficulty paying property taxes, property insurance, or utilities.
In Florida, homeowners entered forbearance at rates exceeding the national average. By 2020, forbearance rates peaked in Central Florida, including at 20 percent in Osceola County. Assistance to homeowners through the CARES Act and subsequently the American Rescue Act has helped save some 4.2 million homes from unnecessary foreclosures.
The payments missed under a forbearance plan are not forgiven, so you must be prepared to resume payments. Be aware the plan will include the regular mortgage monthly payments plus the balance accumulated during the forbearance period. Some of the options available for repayment once the forbearance term expires are:
Reinstatement — a one-time lump sum of any missed payments. After the reinstatement, regular payments of the mortgage continue under the original terms of the loan. Ask yourself, if it’s possible to pay back all the missed payments at once? If the answer is ‘no’, the mortgage servicer will offer other options if you can’t pay the full amount.
Repayment plan — you will repay the missed amount over a set amount of months, typically 3-12 months, on top of your regular monthly mortgage payments until the balance of the missed payments is paid off.
Deferred payments — To bring the loan to current status, the deferred amount is due along with the last mortgage payment date or earlier if you sell your home, refinance it, or pay off your loan.
Extend the amortization period — the length of your loan term increases to pay off the missed amount by extending the original loan term, adding additional mortgage payments.
Loan modification — changing your mortgage loan terms, usually includes a lower interest rate and extend the length of the loan to help reduce the monthly payment.
A mortgage relief plan from the Biden Administration allows modification of eligible VA, FHA, and USDA loans, reducing monthly payments by 20-25 percent. The Federal Housing Finance Agency has similar options for conforming loans.
As for assistance programs, homeowners who are behind in mortgage payments, if their forbearance plan is becoming due, or they are past due in some housing-related costs, can apply for help through the Florida Department of Economic Opportunity through the Florida Homeowner Assistance Fund (HAF) at www.FLHomeownerAssistance.org. To be eligible, applicants must present documentation of a financial hardship due to the pandemic after Jan. 1, 2020.
Assistance is based on income eligibility and is only for a primary residence. Qualifying homeowners can receive up to $50,000. Payments will be made directly to the mortgage servicer, tax collector office, and insurance company, or utility the homeowner owes.
For more information about what programs are available in your particular situation, contact your mortgage servicer, state or local agencies who provide assistance in your area. Homeowners who are seeking more information because they are facing a financial hardship due to a reduction in income should contact a HUD-Approved Housing Counseling Agency.
It is important to reach out for assistance if you think you are not able to make your mortgage payments or you are already behind. There are numerous loss mitigation options that could help save your home and prevent foreclosure.
The first step is to take control and call your mortgage servicer. They will provide information, options, and the steps to follow the process. Explore homeowners’ assistance programs through the state and local government agencies. Without doubt there are alternatives to help you. Consider these options along with the guidelines to follow the requirements to fulfill the plan your servicer might be offering to you.
For more information, contact UF/IFAS Extension Osceola County at 321-697-3000 or visit http://sfyl.ifas.ufl.edu/osceola.
