An estimated 4.1 million Americans are trying to hit the pause button on mortgage payments amid the economic fallout of the pandemic. Here's what homeowners considering a mortgage forbearance should know.
WHAT HAPPENS DURING A FORBEARANCE?
Under the government’s economic rescue law, people who have a federally backed mortgage and are facing financial hardship due to the pandemic are given the right to a forbearance for up to one year. An individual can request a 180 day forbearance but that can be renewed. Andrea Bopp Stark, an attorney at the National Consumer Law Center, says many borrowers are being put into 90 day forbearance but they have a right to extend that.People with privately held loans don’t have the same protections.
Any borrower should also be clear on who is responsible for payments that might typically go to an escrow account — such as those for homeowners insurance or taxes. If not covered by the servicer, the homeowner should continue those payments.Homeowners with federally backed loans won’t have to pay back those missed payments all at once. They can spread them out over time, tack them on to the end of the loan or make a lump sum payment at the end of their mortgage.
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