Mortgage Forbearance Explanation and Warning
The Covid-19 Coronavirus has led to some challenging times for all of us.
The Government has created the CARE Act, to assist homeowners whose income may have been adversely impacted by the coronavirus. One of the components of the CARE Act is the possibility of mortgage forbearance.
Forbearance is often misinterpreted. And while it is intended to help, it can have some dangerous repercussions. Many people are mistakenly thinking that forbearance equals forgiveness. It does not.
Forbearance means that the payments will be suspended for a short period of time, initially up to 6 months, but will need to be caught up when the forbearance period is over.
Think about when you buy something at a furniture store that offers “no payments” for 3 months. You still must pay for the furniture…the payments are just deferred.
But mortgage forbearance is even worse if the borrower has dug themselves in a deep hole and can’t catch up. Should this happen, the lender will enforce their right to be paid, which may cause the borrower to be foreclosed upon. They could lose all the equity in their home in the process.
Forbearance is designed to help those as a measure of last resort. It is not a free pass and may have serious consequences.
Depending on your situation, I may be able to help by eliminating your debts, lowering your payment, and giving you a cash cushion during these turbulent times.
I’m Michael Belfor, contact me to see how I can help.