You have probably heard this term on the news, read it online, heard your neighbors or co-workers mention it, or this may be the first time you are learning about it. Forbearances. What are they? According to the United States Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Single Family Housing’s Mortgagee Letter 2021-18, “The COVID-19 forbearance provides borrowers who experience an adverse impact on their ability to make on-time mortgage payments due to the COVID-19 pandemic with a forbearance period, which allows for one or more periods of reduced or suspended payments without specific terms of repayment.” [1] The COVID-19 pandemic has caused many households to experience loss of work, diminished wages, shifts in the home environment dynamic, and countless other financial and non-financial changes.
Forbearances were created in order to help borrowers tackle the financial hardship of keeping up with paying their mortgages on time as a result of the COVID-19 pandemic. If requested, lenders must offer a COVID-19 forbearance to an FHA borrower who faces these circumstances regardless of the delinquency status of their mortgage. Additionally, lenders must waive all late charges, fees, and penalties, if any, during the forbearance period as long as the borrower is involved in a COVID-19 forbearance plan. Another benefit of these forbearance plans is that if you are granted a COVID-19 forbearance and you are on that plan, you will not be reported as delinquent on your mortgage to the credit reporting bureaus.
Forbearance periods may be extended or shortened at the request of the borrower. HUD began issuing forbearances on March 1, 2020. The forbearance periods lasted up to six months. Borrowers who requested their initial COVID-19 forbearances between July 1, 2021, and September 30, 2021, have been given a six-month maximum amount of time for this forbearance period to last. The initial COVID-19 forbearance periods requested between July 1, 2021, and September 30, 2021, will not extend beyond March 31, 2022.
It is also important to note that borrowers cannot engage in the loss mitigation process at the same time as the forbearance option is being exercised; only one option can be worked on at a time. Many borrowers choose to begin the loss mitigation process to explore avenues to retain their homes once their forbearance periods have ended. If your forbearance period is coming to an end and you want to discuss what happens next, please give our Florida foreclosure defense lawyer a call.
Loan Lawyers has helped over 7,000 South Florida homeowners and consumers with their debt problems, we have saved over 3,000 homes from foreclosure, eliminated more than $100 million dollars in mortgage principal and consumer debt, and recovered over $25 million dollars on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact our Fort Lauderdale foreclosure defense lawyer for a free consultation to see how we may be able to help you.
[1] Mortgagee Letters | HUD.gov / U.S. Department of Housing and Urban Development (HUD)
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