My Mortgage Forbearance is Ending … What’s Next?

Aug 18 2020

This is part of our ongoing series on mortgage relief options and how to handle your loan in a crisis.

Millions of homeowners across the country received mortgage forbearances due to financial hardship during COVID-19. If you’re one of them, you may be confused about what happens next.   

Let’s pause for a nice, deep breath. We’re here to help! 

It’s good that you’re asking questions. Conversations with your mortgage company are coming up that you’ll want to prepare for.

We looked into the options to help you determine the best course of action:

Terms to know 

Throughout this post, we’ll mention several different options (formally called “loss mitigation” options) that may be offered to help you pay back the mortgage payments you missed during a forbearance period. We define them below for your reference as you browse through this post (click the links for additional info): 

Repayment plan: You’ll continue making your regular monthly payment plus an additional amount to catch up on what you owe. 

Deferral: Up to 12 months of your principal, interest, and other expenses that were advanced by your mortgage servicer are set aside in an interest-free loan that becomes due at the end of your mortgage.  

Loan modification: A permanent change to the terms of a mortgage that makes your loan easier to pay. It’s typically granted if a homeowner faces a long-term loss of income. 

Lump sum: You’ll repay the amount you owe in one single “lump-sum” payment – technically referred to as a “reinstatement.” 

Term extension: If your financial hardship is ongoing, you may qualify for your forbearance period to be extended by up to another 180 days.

Who to contact 

Your loan servicer is the company you make your payments to and is listed on your monthly mortgage statement. They can tell you what your options are based on the type of loan you have, your financial situation, and your ability to resume your mortgage payments. We’ll elaborate on these options below. 

(Not sure who your mortgage servicer is? Our loan lookup guide can help.) 

However, while there are several ways to pay back your missed payments, you may not qualify for all of them.   

Tip: If your mortgage has an escrow account to store money to pay property taxes, insurance, and HOA fees (if you have them), your loan servicer should be making those payments. If you don’t have an escrow account, you’re responsible for those payments during your forbearance. 

What to do

Regardless of who your loan servicer is, there are certain steps you should take to prepare for the “What’s next?” convo: 

  1.   Contact your loan servicer. Technically your loan servicer should reach out to you to discuss options as you come out of forbearance, but rather than taking any chances, it’s best to stay in contact with them throughout your forbearance period. Reach out to your loan servicer regarding your plan to repay your missed payments about 45 days before your forbearance ends. You need (and deserve) to know what’s going to happen next. 
  2. Discuss your options. Talk to your loan servicer about your financial situation and see which option, such as a deferral or a repayment plan, will be offered to you.
  3. Document everything. Save every piece of paper or email related to your mortgage. Make sure to document every conversation with your loan servicer (who you spoke with, what they said, next steps). You’ll want to have this record available to ensure that your monthly mortgage statements reflect the action and amounts they agreed to. 
  4. Monitor your credit. It’s a good idea to routinely check your credit reports for errors. If you were paid up on your mortgage payment before receiving a relief option, your account should be reported as current. If you see a mistake in your credit report, there are steps you can take to have your credit report corrected so the error doesn’t affect your ability to get a loan in the future.

Options based on your loan 

The following provides some general information about the options you may have to repay your forbearance depending on which lender owns your loan. 

  • Fannie Mae & Freddie Mac loans

If your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, you’re eligible for several options following your forbearance, including a repayment plan, a deferral, or a loan modification. You can also request an extension for your forbearance if your financial hardship is ongoing.  

Visit Fannie Mae or Freddie Mac for more information.  

  • FHA loans

If you have an FHA loan, you may qualify for a COVID-19 Standalone Partial Claim, which puts your missed payments into an interest-free loan to be paid back when your mortgage is paid off or you no longer own the property, similar to a deferral. 

If you don’t qualify for the COVID-19 Standalone Partial Claim, the FHA offers other options, including loan modifications and repayment plans. 

For more information on Federal Housing Administration Mortgages, contact or call 800-CALL-FHA (800-225-5342).  

  • USDA mortgages

The USDA offers repayment plans, loan modifications, and other options to pay back your missed payments after a forbearance.

Visit the USDA COVID-19 resource page for more info. 

  • VA loans

The US Department of Veterans Affairs (VA) offers repayment plans, loan modifications, and other options to pay back your missed payments after a forbearance.

For additional info, the VA home loans page or contact a VA Regional Loan Center at (877) 827-3702. 

  • Other loans

If your loan is owned by a company other than those we’ve listed, such as a bank or private investor, ask them which forbearance repayment options they offer.  

In closing, don’t wait to address the end of your forbearance — but also, try not to worry. There are several ways to help you regain your financial footing. We’ll be sure to bring you new information as it becomes available, so check back with this post for updates.

If you’re experiencing financial hardship and are in need of additional help, these posts may interest you:

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