Around 400,000 homeowners who’re struggling to pay their mortgages due to the COVID-19 pandemic have failed to take advantage of forbearance programs that could help them, despite being eligible, a report from the Urban Institute has found.
Homeowners with federal mortgages are allowed under the Coronavirus Aid, Relief and Economic Security Act to defer mortgage payments for up to six months if necessary, and all borrowers have to do is contact their lender to attest they’re experiencing pandemic-related financial hardship to qualify.
“These borrowers may not know they are eligible for forbearance or do know but wrongly fear having to make ‘double payments’ when the forbearance period ends,” the Urban Institute’s report said.
It may be worthwhile for real estate professionals to help educate at-risk borrowers about their mortgage forbearance options. The National Association of Realtors offers a downloadable brochure that outlines what borrowers should ask lenders when inquiring about their forbearance options and requirements.
Real estate professionals can also direct clients to a video produced by the Consumer Financial Protection Bureau and HUD, which helps borrowers to explore their forbearance options. The video can be found at the CFPB website, together with useful links and a checklist on how to avoid foreclosure.
“Roughly 2% of government borrowers are needlessly delinquent across different servicer types, vintage years, and geographies, which suggests that an outreach campaign to reach these borrowers must be broad,” the Urban Institute pointed out.
A recent survey by the Mortgage Bankers Association found that 6.87% of mortgage borrowers were in forbearance as of September 28. Around a quarter of those borrowers said they were able to stay current with their payments despite being in forbearance, using it as more of an insurance policy in case they’re suddenly unable to keep up.