COVID Forbearance: Separating Fact from Fiction

What You Need to Know

FACTS

• As part of the CARES Act, the federal government states that borrowers with loans owned, guaranteed, or insured by Fannie Mae, Freddie Mac, FHA, VA, and USDA can apply for forbearance for up to 6 months initially and up to 12 months in total.
• Forbearance is not payment forgiveness. It means payment postponement. All payments are still owed. The borrower and servicer must discuss and agree on repayment options at the end of the forbearance period.
• This program is intended for borrowers that are experiencing an immediate HARDSHIP that impairs their ability to make their current mortgage payments.
• Forbearance is not automatic. You must contact your mortgage servicer to discuss your situation and to request and be approved for a forbearance. Your mortgage servicer is the company where you make your mortgage payment.

FICTION!

• Fannie Mae, Freddie Mac, FHA, VA, and USDA are all on the same page of how to handle the forbearance requests.
• Loan servicers for the above referenced agencies are fully aware of the policies and procedures they must follow to determine if a borrower is eligible for forbearance.
• If you postpone 6 months of payments, the payments will just be tacked on to the end of the mortgage term. This is called a modification and is a much more complicated situation than is being advertised.

Please contact your servicer and FULLY understand your options for payment postponement and FULLY understand your obligation for repayment after the postponements.