What Happens After Your Freddie or Fannie COVID Deferment Ends?
When the COVID-19 pandemic hit, the world economy shut down within a matter of weeks. As the virus forced us all to stay quarantined, many people lost their jobs and were unable to pay monthly bills, including their mortgage payments. For homeowners with a Fannie Mae or Freddie Mac mortgage, the Coronavirus Aid, Relief, and Economic Security (CARES) Act offered protections for mortgage relief and foreclosure provisions. But what happens as the end date approaches for these mortgage deferments?
Forbearance does not equate to mortgage forgiveness, but rather deferral for an agreed amount of time. Originally, under the CARES Act, federally backed mortgages by Fannie Mae and Freddie Mac could receive a forbearance for up to twelve months. In February the Federal Housing Finance Agency (FHFA) announced these mortgages could receive up to 18 months of payment relief. The deferred payments can be repaid at mortgage maturity, when the mortgage is refinanced, or when the home is sold. Additionally, the FHFA announced it would extend moratoriums on single-family foreclosures and evictions until June 30, 2021.
As forbearances near conclusion, homeowners should receive a 30-day notice from the mortgage servicer before the forbearance plan is scheduled to end. Depending upon the situation, homeowners could be eligible for an additional forbearance period or can just resume normal mortgage payments, with the amounts that were deferred added to the end of the mortgage.
While a forbearance plan may allow homeowners to deal with short-term financial challenges without jeopardizing credit reports and ratings, it does come with things you should be prepared for. You should carefully check your credit reports throughout and after the forbearance to make sure it is being reported as it should be. You should be prepared that late fees and interest charges which accrued during your approved deferral period may apply and be due.
Throughout this entire process, you should engage in open communication with your loan provider to describe your financial situation to work out the best option for you. There are several options to pay back your forbearance, including:
· Full Repayment: Paying back all missed payments.
· Repayment Plans: Catching up gradually on missed payments while making regular monthly payments moving forward.
· Resuming Normal Payment: Resuming monthly payments but cannot afford additional amount of missed payments yet.
· Modification of the Loan: Changing terms of the mortgage due to a large and sustained reduction in income resulting from COVID-19 crisis.
If you are having issues with your mortgage, do something before it is too late. Our attorneys have litigated against most banks and servicers, including Wells Fargo, Mr. Cooper (Nationstar), Bank of America, Chase, Caliber, Select Portfolio Servicing, Rushmore, Citi, Real Time Resolutions, Carrington, Citizens Bank, Loan Care, SN Servicing, Shellpoint, U.S. Bank, Selene, and others as well mortgage investors like Fannie Mae and Freddie Mac. If your loan is not federally backed, you will need to call your mortgage servicer to find out their particular terms for forbearances. Review your monthly statement or visit your mortgage servicer's website for information on how to contact a customer service agent.
Dye Culik PC is a consumer protection law firm located in Boston, Massachusetts and Charlotte, North Carolina. Our attorneys have helped hundreds of homeowners with mortgage and foreclosure issues. If you have questions, contact Dye Culik PC to see if we can help.