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Foreclosures and the End of Mortgage Forbearance

Throughout the past year, Covid relief programs have helped American families struggling to make their mortgage payments hit the pause button. This has temporarily eased their financial burden, but many forbearance agreements are now expiring.

Are you in this situation? You may be at risk of being foreclosed on if you cannot pay the postponed payments.

Options to Avoid Foreclosure After Forbearance Ends

Currently, forbearance terms given by lenders are providing an 18-month pause on home loan payments, which many borrowers have come to the end of. While some homeowners will simply put these owed payments onto the end of their loan schedules, they must resume repaying their loans to qualify for this option.

What options are available for those who can’t? The following options may be the answer:

Repayment Plans

This option allows you to make up the missed payments over time of up to a year. It’s also possible that your lender would let you resume regular payments plus part of those missed each month instead of two full amounts.

Reinstatement

This is usually the first option you have when forbearance comes to an end. Essentially, you will pay the total due in one payment. This is not required unless you have the financial means to do so. To consider other financing options, you will have to tell the lender you can’t do this when they initially ask.

Refinancing

If you have taken care of the total outstanding payments or are currently paying on that balance, you may qualify for loan refinancing. This could incorporate the remaining amount due on your forbearance and your current loan amount into a single loan at a lower payment.

Loan Modifications

Another approach to dealing with your outstanding loan payments is to modify the terms of your loan. This is similar to refinancing, except you are only trying to negotiate more manageable loan terms, which could lower your monthly payment.

COVID-19 Deferral

Instead of tacking an additional 18-months of forbearance payments at the end of your loan, you could also set up the amount owed as a balloon payment due when it ends. This would potentially cause an escrow deficiency, though, since many loans include insurance and taxes in the mortgage.

Homeowner Assistance Fund

If you can’t get your loan modified, and you still have several months till your forbearance runs out, the Homeowner Assistance Fund could be your best option. It’s a provision within the American Rescue Plan passed in March of 2021. States will be able to use funding from this legislation to provide relief to residents, including to borrowers needing help catching up payments when their forbearance ends. You can go to the National Council of State Housing Agencies to determine if your state will be participating or already has such a program in place and learn more about applying.

If you or someone you know wasn’t current before being granted forbearance by a lender, not all of the previously mentioned options may be available. Speak with your lender first and discuss your situation with a skilled foreclosure defense attorney. They can let you know if you are not being offered programs you qualify for and what other remedies may help your situation.

Challenges for Homeowners Who Don’t Have a Federally Backed Loan

Many of the previously listed options are only available for federally backed loans. If your mortgage is through a private lender, you may find it difficult to resolve your outstanding payments when your forbearance ends. Your best first step is to reach out to your lender and ask what avenues are available for your situation. Then, contact a lawyer to discuss your circumstances and determine the next steps you should take to protect your home from foreclosure.

Speak with a Qualified South Florida Foreclosure Defense Attorney

If you are one of the millions of people who relied on mortgage forbearance during the pandemic, the thought of losing your home to foreclosure is devastating. Fortunately, there are many options out there to help you get relief from this debt and hold onto the residence you’ve worked so hard to build.

At the law offices of Marc Brown, P.A., we help South Florida families like your own navigate this stressful experience. Trust our extensive understanding of state and federal real estate law to ensure you resolve your missed payments on the best terms possible for your situation.

Contact our office today to further discuss your case and set up a free consultation. Don’t wait! Once your forbearance ends, you have a limited amount of time to resolve the situation with your lender before they take action.