Mortgage Forbearance For GSE (Government Sponsored Enterprise) Loans
If you have a federally backed mortgage loan, the CARES Act provides the right to a mortgage forbearance. Federally backed loans include:
The forbearance can be for up to one (1) year if you can represent that you are experiencing financial difficulties based on COVID-19. The request for Forbearance must be made before the President ends the emergency, or December 31, 2020, whichever comes first.
It doesn’t matter how far behind you were when the emergency started, or even if you are in foreclosure. You still have the right to the forbearance.
A forbearance is a temporary suspension of your obligation to make monthly payments. Your lender cannot charge fees, penalties, or interest beyond the amount that would be charged if you were making normal payments.
What Happens at the End of the Forbearance?
After the forbearance period, the principal, interest, and escrow payments that would have come due during the forbearance must be paid.
If you were less than 30 days behind when the emergency hit, and you can resume normal payments after forbearance, you should not have to submit a full application and you should be entitled to get:
- Repayment Plan
- Payment Deferral (non-interest bearing lien for accrued arrearage)
- An “Extend Modification”
- Extend loan term equal to forbearance term
- Maintain pre-forbearance payment level
- May have to repay an escrow shortage separately up to 60 months
- A “Cap and Extend Modification”
- Can capitalize escrow shortage & extend term
Additionally, if you were less than 30 days behind when the emergency started and you get the forbearance, the lender must report you as current on your credit report.
If you need assistance to determine if your loan is federally backed or to obtain a forbearance, contact Ira J. Metrick, Esq.