We see it on all of the media outlets daily now, if you are having trouble making your mortgage payments just call your mortgage company and ask for a forbearance. Well, let me stop you right there! A mortgage forbearance program is not a loan modification and it is not a forgiveness of loan payments. A forbearance is a very quickly design program by the federal government. The basic attributes are that the "borrower" (you) will not have to make a monthly payment on your home loan for a predetermined set of time, instead your "servicer" (the mortgage company) will make those payments for you to the investor until you can start making payments again. That sounds like an excellent idea right? I mean who wouldn't want to "stick it to the man" and have some rich banker make my mortgage payment for me. But what has not been explained to the public is that YOU WILL HAVE TO REPAY the funds to the servicer. There are a few options floating around out there. One option is that banks are requiring borrowers to repay all of the delayed mortgage payments in one lump sum another option is to spread the delayed payments out of a twelve month period. For example: Your mortgage payment is $1000.00 a month Option one would mean that for three months you do not pay your mortgage and in month four you will be responsible for writing a check to your mortgage company for $4,000.00 Option two would mean that for three months you do not pay your mortgage payment and in month four you would write a check for 1,250.00 and would continue to write the same amount for the next twelve months. Both of these scenarios are supposing that your mortgage company does not charge you any fees for the forbearance. The current forbearance arrangements made by the federal government are supposed to be used only by those affected directly by the Covid-19 epidemic, however, there are no protocols of verification in place at this time. That means that just about anyone and everyone can apply for forbearance at this time. As of today's date roughly 18% of the US population is in some state of unemployment. Federal banking institutions are reporting that 6.99% of homeowners have applied for forbearance which is roughly 3.5 million borrowers. The downside of this for the housing market is that for those 3.5 million borrowers most if not all have not been told that when they applied and accepted the forbearance of their mortgage they immediately lost the ability to apply for any new loans until at least twelve months after they have completely repaid the forbearance amount. That means that people that chose option two and are taking twelve months to repay their forbearance will not be able to apply for a loan for another 12 months after that time period. Economics experts are suggesting that roughly half of the population that has gone into forbearance will end up losing their homes to foreclosure or selling their homes in a short sale. If it is at all possible to stay out of the forbearance arena please do so. Give us a call at Pynk and Co and we will do our best to help you through these muddy waters.
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AuthorThree Spunky Eclectic Sassy Darling Realtors® that live in the Hollywood of the South and help people all over the east metro Atlanta area with all kinds of real estate needs. Lynn Pynckels, Dewayna Pullum, and Stepfanie Gray Archives
January 2020
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