Many people took advantage of mortgage forbearances during the COVID-19 pandemic.  If you received a forbearance plan to skip mortgage payments during the pandemic, you will have to do something when it ends, to keep your home from going into foreclosure.  The mortgage payments that you were allowed to skip are not erased, you must make some type of arrangement with your lender to repay this amount.  There are different options for dealing with the missed payments that depend on the type of loan you have.  Under the CARES Act, if you have a federally backed loan, you cannot be forced to repay all the missed payments at once.  This may not be the case for non-federally backed loans. A federally backed loan includes FHA, Fannie Mae, Freddie Mac, VA loans and USDA. 

It is important to reach out to your lender or servicer before your forbearance runs out.  Your lender may contact you, but if not, be sure to call and inquire about your options at least a month before your forbearance is scheduled to end to discuss your options.

Following are the typical options available on federally backed loans:

• Reinstatement: A reinstatement means that you pay the total forbearance amount all at once. You do not have to take this option unless you are financially able to make such a payment. Your lender will ask you if you can and you must say no to be considered for other options.
• Repayment Plan: A repayment plan allows you to pay back the missed loans over time, up to 12 months. If this is not possible or would be a hardship for you, tell you lender you are not able to do this.  You will have to pay your regular monthly payment plus part of the missed payments.  If you took a 12 month forbearance, this would result in having to make two payments a month for a year.
• COVID-19 Payment Deferral: This is the option that most people explain as putting all the missed payments as a balloon payment at the end of the loan, or when it matures. If your taxes and insurance are included in your mortgage, the amount to cure those missed payments may have to be dealt with in a different way as you will now have an escrow deficiency.
• Loan Modification: A loan modification is a permanent change in the terms of your original loan. It is like refinancing without actually refinancing. The goal is to make your payments or terms more manageable, and typically results in a lower ongoing monthly payment.
• Refinance: If you have resolved or are in the process of resolving your forbearance plan, you may be eligible to refinance your loan. Work with your servicer to discuss interest rates and refinancing options.

If you were not current on your loan before your forbearance was granted, you may not be eligible for all the options listed above and likely would need to do a mortgage modification.  I am seeing many people able to take advantage of the above options without attorney assistance.  If your lender is not offering the options you are entitled to, seek legal assistance before the situation gets dire.

If your mortgage is not a federally backed loan, your options may be limited.  You should contact your lender to see what your options are.  If the options provided to you are not feasible for your situation, you should contact a housing counselor or attorney to see what other options are available.  Bankruptcy is an option to help people who are behind on their mortgage.  In a chapter 13 bankruptcy, you can either cure your back payments over time, five years maximum, or you can participate in the chapter 13 mortgage modification mediation program.  This program streamlines the mortgage modification process.  The bankruptcy attorneys at Holland Law Group can evaluate your situation and determine if you are a good candidate for a mortgage modification. 

Most important, do not delay.  Look into your forbearance repayment options before your forbearance ends.