Q: Do I have to pay my mortgage payment next month?
A; Maybe. Maybe not.
As you all know, the world wide pandemic caused by coronavirus or COVID 19 has caused many people to suffer immediate financial hardships due to hours being reduced, layoffs, businesses being forced to close, and the chaos that has been playing out on the stock market. More chaos is expected, and this is expected to last months, not weeks. So what can our nation do as we hunker down, many of us sheltering in place with no or reduced income? Ever thought of buying a caravan? Australian Caravan Finance is the place to go to for a loan. In the face of these challenges, the government is pushing lenders to consider forebearance options for affected borrowers. Forebearance is a new term for many people, and the headlines won’t tell you all you need to know.
Forebearance means a temporary agreement to skip a payment, or reduce the amount you’re required to pay due to a temporary hardship.
So could you skip a payment? Maybe. But you can’t just skip because you read this, or another, blog. There’s more to it and you need to do some investigating before you decide to do this….
* Know that every loan is NOT eligible for this plan.
* Go to your servicer’s web site. Your servicer is whomever you make your payment to… Wells Fargo, Bank of America, etc. They likely have a page that talks about forebearance and their process. If they direct you to make a phone call or fill out a form, start there.
* There are questions to ask before you decide to skip a payment.
1. How do I get approved?
2. If I get approved will you report this negatively to the credit bureaus?
3. Will all penalties, late fees, etc, be waived?
4. Will you take any actions toward foreclosure during this time?
5. How long will this arrangement last, and what are my obligations going forward?
6. Since I won’t have to make this payment NOW, when WILL I have to make this payment?
7. How much will skipping this payment cost me eventually?
8. If you reduce my payment and I can’t make the reduced payment, what happens?
9. What if my situation lasts longer and I won’t be able to recover financially from this loss?
10. How can I get this in writing, and when?
It is my understanding that if you have a Fannie Mae or Freddie Mac loan, forebearance should be possible if you have been negatively financially impacted by the COVID 19 pandemic. You will have to update them monthly. This will be TEMPORARY. Penalties and late fees will be waived… BUT you will still accrue interest, so ultimately this will INCREASE your loan payoff. THIS IS CRITICAL TO KNOW. Also… I can’t say this enough – this is not automatic, may not be an option for you, and the terms may vary depending on your loan. Also, while you may not have to provide proof up front, be prepared, you’ll likely need to provide proof of hardship later.
**You can not stop making your mortgage payment if you have NOT been impacted by COVID 19 in some financial manner.**
Also, if short term turns into long term, and you won’t be able to recover, PLEASE, apply the lessons of the past recession. DO NOT… I repeat… DO NOT put your head in the sand, ask for help. I’m here. Our conversation will be completely confidential. There is NO SHAME in asking for help. YOU did not cause this. Please allow me to impart upon you the wisdom I gained by working through the last recession. I have resources for you and I will continue to develop more resources as they become needed. Don’t wait. Be proactive. Work outs take time.
Remember something: We are all in this together, even if it is “separately”. (That’s my horrid attempted at a social distancing joke. Please roll your eyes.) But seriously, this too will pass.
Here’s some more information from the Consumer Federal Protection Bureau:
Folks – if you want to reach out me, here’s how to do this…
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