Forbearance means patient self-control; restraint and tolerance. I practice forbearance when my little dog Frida eats my best sandal. I don’t get mad though I do try to remember to close my closet door.
A loan forbearance can be the same thing. The person owing the debt can’t pay right now (not a good thing) but the lender allows the debtor more time and there’s no punishment. Or there shouldn’t be.
The analogy really doesn’t work here because my dog should have been disciplined if I had caught her in the act. And the debtor did nothing wrong (unlike Frida). This is where it falls apart and I only use the example so I can legit post a photo of my little girl.
Should you? Shouldn’t you?
What’s the harm? Who can it hurt?
What is the harm asking your lender for forbearance on your mortgage for 6 months?
Let’s unpack this.
The CARES Act stimulus package requires servicers to provide forbearance–a temporary postponement of payments–to any homeowner with a federally-backed mortgage. Americans with other mortgages may also be able to receive forbearance at their servicers’ discretion.
The goal of this requirement is to help people pay their mortgages who might otherwise lose their home to foreclosure because of lost income during the COVID-19 pandemic. If you find yourself in this position, first make sure your loan is backed by federal agencies.
If you want to explore this option, ask your service these questions:
Are they guaranteeing no penalties, no late fees, and no reporting it to credit agencies?
How long do you have to pay back the suspended payments? If they require payment back right after the forbearance period (usually 180 days), you might be in big trouble.
Can they add another 180 days?
Will they allow you to re-finance or get a loan modification if you continue to struggle with payments?
And be prepared to answer a few questions yourself:
Why can’t you make your payments?
Is this temporary or permanent?
What are your assets including money in the bank?
According to the CARES Act, you won’t have to prove your need, but you will have a “friendly” discussion with your lender. Don’t lie. This is new to everybody and most of the banks screwed up their loan modification offerings during the the housing crash in 2008 so don’t expect smooth sailing.
You need to negotiate no matter what they offer. Stand your ground. Most lenders don’t want your house so they will negotiate but do your homework and look up everything you can on the topic. No lender is excited about fielding thousands of calls from their mortgagees trying to answer questions they don’t have answers to. Be firm. Be kind. Be clear on the questions you need answered.
We all got to put our big pants on. It’s time to get out of those sweats and put pants on anyway. You’ve got work to do!
UPDATE: I called my mortgage lender just to see what they were offering and I asked two questions:
How long are you offering postponement? Answer–90 Days
When will the postponed payments be due? Answer–at then end of the 90 Days though they would consider other options.
How does that help anyone? Just sayin’…..