What Happens When Your Mortgage Forbearance Program Ends?
If you live in New York, and you’re your mortgage forbearance is about to expire, the are a number of things need to know.
Running Out of Time
If you entered into a mortgage forbearance program last year (whether it was COVID-19 related or not), your forbearance is rapidly coming to an end. And that means you have to figure out a way to repay the 6, 12, or 18 months of back mortgage payments you now owe.
On the positive side, thanks to the CARES Act, banks aren’t allowed to demand all your missed payments as one lump sum. Nor can they charge any additional interest, fees, or penalties. And, since you were part of a lender approved forbearance plan, they can’t report the missed payments on your credit report. But you are still going to have to deal with your program ending.
Are You Able to Pay Your Monthly Mortgage Payments?
If you entered a mortgage forbearance program due to losing your job because of the pandemic, and are now working again, you‘ll have a number of options:
- Pay everything you owe all at once – while the banks can’t force you to pay in one lump sum, if you have the money, you can do so if you want.
- Ask your lender for an intermittent payment plan – this lets you payback what you owe by adding a little bit more to each monthly mortgage payment until you’ve caught up.
- Ask about a payment deferral – this takes the payments you missed and adds them to the end of your mortgage.
- Ask about refinancing or a loan modification – could you make your mortgage payment easier if the monthly cost was lower? Some lenders will allow you to refinance or modify your loan after leaving a forbearance program.
Are You Still Struggling Financially?
If your forbearance program is ending and you don’t think you can start paying your monthly mortgage payments, there are still things you can do.
- If you have an FHA loan you may be able to ask for an extension to your forbearance program – see this release from the US HUD – https://www.hud.gov/press/press_releases_media_advisories/HUD_No_21_160
- If your forbearance program was COVID based, there are also other New York State and Federal options to review – read more here – https://www.ny-bankruptcy.com/my-covid-mortgage-forbearance-is-ending-now-what/
- If you have enough income to maintain your home and continue to pay your insurance and taxes, you may want to look into a reverse mortgage (note – these have age restrictions).
- If you feel you can simply no longer afford your home, you have some choices:
- If you live in an area where home prices have risen dramatically, you should be able to sell your home for more than you owe.
- If, however, you owe more than your home is currently worth, you may need to talk to your lender about a short sale.
- Another option with your lender is a deed in lieu of foreclosure. This transfers the deed of your home directly to the bank, releasing you from any mortgage debt.
- If you can’t find a plan that works with your lender, and they are threatening to foreclose, you can declare personal bankruptcy. This will immediately halt any foreclosure proceedings your lender may have started and will give you a bit more time to regroup.
What to Do Next
Since there are so many variables, the best option you have is to contact a lawyer experienced with foreclosure defense, distressed mortgages, mortgage modifications, short sales, foreclosure avoidance, and negotiation/debt settlement.
Reach out to New York attorney Ronald D. Weiss, P.C. for a free consultation. He can guide you through the available options for your specific needs. Working together, you can find the right choice. Ron can get the process started and will be at your side the whole time. Call 631-271-3737 and take the first step to a fresh start.
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