In 2020, the United States suffered one of the worst economic recessions in history. Homeowners facing financial struggles had to request forbearance to pause or reduce mortgage payments temporarily. But forbearance does not last forever. Those who first entered the mortgage bailout program are likely entering their last possible quarter for relief. If this is your case, you will likely find yourself faced with the expectation that you make your missing payments soon.
Forbearance period
Starting in March 2020, people joined the government’s forbearance program under the CARES act. The initial forbearance plan was of 3 to 6 months. Still, borrowers could ask for an extension if their financial situation had not improved because of the pandemic. The different mortgage servicers allowed people to extend their mortgage for a maximum of 18 months of total forbearance, which means some that first entered the program will need to start paying in September.
Payment options
If your forbearance period is coming to an end, you will likely be required to make your missing payments. There are many options to do this, depending on the entity that owns or backed your mortgage. Generally, servicers will give you four different options to manage your due payments:
- A repayment plan
- A payment deferral
- A loan modification
- A lump sum payment
A federally backed mortgage generally does not require you to pay your missing payments in a lump sum. Private services may not require lump sums either, but some may. To find out about your payment options, talk to your mortgage servicer.
Foreclosure defense
Mortgage payments can be overwhelming, even more so when we are still in an economic crisis. According to the U.S. Department of Labor, 9.5 million people were unemployed in June 2021.
You are not alone with the struggle, and if none of the payment options work for you, there are still options that can provide solutions to your debts. If you don’t pay the mortgage, you may risk losing your house. However, you have the right to fight the foreclosure proceedings. One way to avoid foreclosure is to apply for a refinance loan with a bank. Another solution is to file for chapter 13 bankruptcy, which will stop your foreclosure process until you reorganize your debt.