FORBEARANCE MATH –
Just a heads up so we are thinking ahead on things – Let’s do some ‘mortgage forbearance math’.
Mom and Dad have a mortgage.
It’s currently $1,500 per month.
Dad gets laid off, calls the servicer, and asks for forbearance.
In one phone call, he gets 6 months “off” from paying.
Seven months later, Dad is finally back to work, and hasn’t been able to save any money during the forbearance.
Forbearance is lifted and servicer says,
“That will be $9,000 + $1,500, which is now due”. ($10,500)
Dad almost passes out and says, “WHY??”
Servicer: “That’s the 6 months of forbearance plus the current month.”
Dad: “I can’t do that, can we work something out?”
Servicer: “Sure, we will spread out the $9,000 over 12 months.”
Dad: “Phew….ok, good. What will that look like?”
Servicer: That will be $2250 a month for the next 12 months.”
Dad: ” OMG!!! I can’t afford that.”
Dad: “Can I refinance?”
Servicer: “No because the loan went into forebearance.”
Dad: “What can I do?”
In a nutshell, this is forbearance, folks. Forbearance is not forgiveness.
There are usually pros and cons to most decisions like this.
If you’re over 62, a better option would be to investigate how a reverse mortgage with NO required payments would benefit your financial future.
I need to keep putting this message out there, because I am still getting a lot of questions.. Please understand the seriousness of this, and if you still have questions, you know I am always available to help. Even if you just want to pick up the phone and talk. I will help guide you in the proper direction. I know these are very hard times, and I understand there is panic in uncertainty. Please just hang in there. This too, shall pass.
Answer from the FHA: The FHA has communicated to mortgage servicers that they must offer you special COVID-19 mortgage payment relief options if you are eligible. If you are able to keep making your mortgage payments during the national emergency, it is in your best interest to do so. If you find you are no longer able to make your monthly mortgage payments, the first thing you should do is contact your servicer — the company to whom you make your monthly mortgage payments. Your servicer will be able to provide you with what is known as forbearance, a mortgage repayment option that allows you to defer or lower your monthly payments for up to six months, and an additional six month period, if needed. Your mortgage servicer can further explain the details of the FHA COVID-19 National Emergency Forbearance option — what it means now and the options for bringing your mortgage payments current in the future.
Marie Bjornson Mortgage Team
Fairway Independent Mortgage Corporation