Next steps for homeowners with a forbearance plan payment due

Mortgage relief for homeowners
Posted at 5:21 AM, Aug 05, 2020
and last updated 2020-08-05 07:57:48-04

BALTIMORE, Md. — The grace period could be ending soon for many homeowners who took advantage of offers to put their mortgage payments on hold because of the pandemic.

It also comes as millions of people nationwide have yet to return to work and continue to struggle to pay their bills.

Homeowners affected by COVID-19 who received a four or six month break on their mortgage payments and haven't gotten back on their feet yet should talk with their lender to find out what to do next.

The economic situation for many continues to get worse as the pandemic has yet to end.

According to the federal mortgage backer Fannie Mae, about a third of mortgage holders are having trouble making ends meet to pay their housing expenses.

Fannie Mae vice-president and fair lending officer Danielle McCoy said “a lot of them might have taken forbearance if they're aware of it. Forbearance is a temporary reduction of your mortgage payment or just a temporary pause of your mortgage payment.”

McCoy explained once the grace period ends, homeowners will have to repay the mortgage payments or the amounts they missed, but they also could ask for more time.

“You can extend your forbearance period up to an additional six months. Most people haven't had six months already, so people still have plenty of time to extend their forbearance, that's the first thing,” McCoy said.

At some point, however, the missed payments will have to be repaid but there are a lot of things homeowners can do besides having to pay it back all at once. It can buys some people time, especially if those who are still out of work or had their hours cut back.

“Maybe a payment deferral is best for them. That's taking the payments that they missed and and putting it at the end of their mortgage. Another might be loan modification, so there are a number of options and it depends on their financial situation,” McCoy said.

Interested homeowners with a government backed mortgage from FHA, VA, USDA, Fannie Mae or Freddie Mac can still request a forbearance under the CARES Act.

“A good way to find out who owns your loan is to use the loan lookup tool. has a loan lookup tool you can use to see if Fannie Mae owns your loan, and right next to it we have a link to Freddie Mac's tool,” McCoy said.

The Consumer Financial Protection Bureau offers another resource to track who owns your mortgage. Homeowners may also contact their mortgage servicer.

Financial experts recommend anyone struggling to pay their bills should contact their lender as soon as they realize they might miss their payment due date to see what can be done to help.

The financial website Investopedia laid out a series of COVID-19 provisions established by both Fannie Mae and Freddie Mac to help struggling homeowners.

These include mortgage payments may be reduced or suspended for up to 12 months; foreclosures are on hold through August 31st; and there are no penalties or late fees for homeowners in a forbearance plan.

Some homeowners might be worried if they're granted a forbearance that it also might hurt their credit, but McCoy explained how it actually could help.

“One of the good things about forbearance if you're a homeowner, is that if you were current before you started having financial difficulty due to COVID and you get a forbearance, your account will still show as current,” McCoy said.

“I think that's a real good reason to make sure you're researching your options and you're figuring out a way to really use them. So, you don't have to necessarily have a delinquency if you can't pay your mortgage,” McCoy added.

Besides allowing for mortgage forbearance, the CARES Act includes consumer credit protection for people who are deferring their payments.

If a homeowner is approved for a payment deferral due to COVID-19, lenders are supposed to use a special code to report accounts in forbearance to the three credit reporting agencies, which are Experian, TransUnion, and Equifax.

A CARES Act forbearance alone will not cause credit scores to go down.

Consumers who notice a mistake on their credit report can dispute it by putting it in writing with their lender and each of the three credit bureaus.

Helpful links

Fannie Mae mortgage relief for homeowners

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