Real Estate Marketing & Beyond
Left unable to work due to the coronavirus pandemic, around 2 million American homeowners have sought to apply for mortgage forbearance from their providers. But experts warn that they should look closely at the terms they’re offering, or they could be in for a nasty shock in the months to come.
The problem is that some forbearance options mean that homeowners are required to make up for all of the missed payments by paying a huge lump sum once the program expires. Realtor.com reported on the case of one Chicago homeowner, who realized he’d be required to pay three monthly payments all at once at the end of the program.
The vast majority of mortgage servicers are offering some kind of mortgage forbearance program in light of the COVID-19 pandemic, which has left millions of Americans wondering how they’re going to meet their monthly payments. Most government-backed and private loans offer up to 12 months forbearance, but experts say homeowners need to ask what will happen once that period ends.
Most homeowners should be okay, as Fannie Mae, Freddie Mac and the Federal Housing Administration, which back the majority of mortgages in the U.S., say their borrowers will never be required to make lump sum payments. Some banks may also work out their own repayment plans, realtor.com reported.
However, Joseph Sant, deputy general counsel for the Center for New York City Neighborhoods, told realtor.com that he’s worried that the lack of uniformity among mortgage assistance programs may lead to confusion.
“We are concerned about what’s going on right now, with many people going into these forbearance plans without a clear sense of what will happen at the end,” Sant said.
Experts advise homeowners to consider their options carefully.
“If you can make the payment, make the payment now,” mortgage broker Rocke Andrews, president of the National Association of Mortgage Brokers, advised. “Don’t take [forbearance] if you don’t absolutely need it. It all becomes due, and who knows what happens between now and then.”
