1 million mortgage borrowers haven’t asked for forbearance

Research shows that a little over a million homeowners who are at least 30 days past due on their mortgage payments haven’t entered into a mortgage forbearance program or engaged with their lender about some other form of assistance.

The research came from Black Knight, a mortgage data company, the Wall Street Journal reported.

The problem for homeowners who don’t take advantage of pandemic-related forbearance is that they may be at risk of losing their homes if they can’t make their payments.

Around 680,000 of the homeowners who’ve failed to seek forbearance have federally guaranteed mortgages from Fannie Mae and Freddie Mac, and are eligible to enter a forbearance program that would put their monthly payments on hold for a year without any penalties being applied. They would have to pay back the funds at a later date, however. Other lenders meanwhile, are offering similar assistance programs even if a mortgage isn’t federally guaranteed. But borrowers in both cases need to initiate things by asking for assistance, although they don’t need to show any proof of financial hardship.

Surveys have shown that some homeowners might not be reaching out for help due to confusion, earlier surveys have shown. A July study by the National Housing Resource Center found that more than half of borrowers were unaware of their mortgage forbearance program, or did not understand how it works. And of those who said they’re confused about their options, around 70% say they fear being required to make a large, lump-sum payment at the end of the forbearance period, which isn’t true.

“Some borrowers are falling through the cracks that we’re not picking up,” Lisa Rice, president and CEO of the National Fair Housing Alliance, told The Wall Street Journal. “It’s just a really sad series of events.”

Meanwhile, housing groups warn that the number of homeowner with past-due mortgage payments could grow as more who’re currently in forbearance reach the end of their program terms in October. Those homeowners will need to request an extension from their lender if they need more time.

“Borrowers who are eligible to be in forbearance will preserve their options to avoid foreclosure versus those who became delinquent and have accumulated penalties and interest in a march toward foreclosure,” Faith Schwartz, president of advisory firm Housing Finance Strategies, told the Journal.