Mortgage Forbearance Repay or Modify

Forbearance Update

If you are seeking a forbearance due to the COVID-19, you need to know some updates so that you are duly educated and know what to present to your lender. FNMA has made it easier and prolonged the time-frame for forbearance.  These guidelines are for those lenders who report to Fannie Mae.

As you know the forbearance plan is referred to as the CARES Act. This plan initially stated that the time-frame was limited to 180 days. That has changed and we will give you the updated information.

Does FNMA (Fannie Mae) Own Your Loan

If you are not sure that Fannie Mae owns your loan, you may use this link to find out. Does FNMA Own My Loan?

What You Need to Know About Forbearance Changes

• You will need to attest to financial hardship.
• No documentation is need, just the attestation to financial hardship with job loss, loss of income, layoff, etc.
• You will be provided with an initial forbearance plan for up to 180 days.
• If you are still having a financial issue and cannot manage your financial situation, you can have the option of an additional 180 days.

Here Are The Basic Guidelines For Payment Relief

• Get payment relief via a forbearance plan that is offered by your lender *some may have specific guidelines.
• Repayment plans are set up by your lender and the forbearance must be paid.
• The forbearance is not a forgiven debt as you still owe the money and it is part of your initial agreement.
• You do not have to pay your missed payments all at once, the lender will set you up on something you can afford once you get back to a normal financial situation.
• Update period as stated above up to 180 days initially – and then another 180 days.
• There is late fee relief as well during the forbearance plan.

Options Outside of Repayment Plan – Loan Modification

If you are struggling to get back to making your mortgage payment on top of a repayment plan, you can request from your lender a loan modification.

• A modification will assist in making your payments more affordable.
• The modification can extend the term of the loan which helps in making the payments smaller.
• A modification will help banish your delinquency status.
• A modification can protect you from possible foreclosure.
• It can also help stop the effects of a lower credit score.

When To Request A Modification

• If you cannot qualify for a refinance *your lender can provide you with the reasons for which you are ineligible for a refinance.
• You cannot find your way out of your financial crisis.
• Your mortgage payment is so behind that you cannot catch up, or pay additional amounts for the forbearance amount.

How a Modification Can Change Your Financial Hardship

• The delinquent amounts of your mortgage payments, taxes/insurance, and interest on your loan can be added into the principal balance of the modification amount.
• The modification term may be increased (as stated above), which can reduce the PITI (principal, interest, taxes, & insurance) of your loan.
• The lender may lower your interest rate.
• The term is allowed to be extended from 30 years to 40-years at this writing. *guidelines change, check with your servicing lender.
• If your initial mortgage loan is an adjustable-rate mortgage, it is possible to modify your loan to a fixed-rate mortgage. *this underwriter recommends fixed-rate mortgage loan products.

Here is How To Proceed For The Modification Option

• Gather your current financial information and current mortgage loan documentation together. The more information you have upfront, the more time it saves. Give full disclosure.
• Current pay stubs, W-2s, Commission Income (if applicable), Tip income information, and most recent tax returns. You may need two years of tax returns.
• You will need to account for all of your debts to include, alimony or child support payments, installment loans, revolving CC debts, student loans, and any other debt you pay monthly.
• Give yourself a break by having all of your information together along with a fully described explanation for why you are still in financial hardship and need to modify your current mortgage to something more affordable.

Remember this:

You are one in the middle of millions who are suffering from financial hardship, however, always remain obligated to the necessity of paying your mortgage payment when possible.

*mortgage guidelines change often. We have used the information up-to-date. This could change next week, next three to six months. We will try to update you when possible of changes.