The government granted Americans mortgage payment relief options during the coronavirus pandemic by allowing some borrowers to pause their mortgage payments, but what repayment options do homeowners have once the grace period has ended?
The forbearance provisions, included as part of the CARES Act, apply to federally-backed mortgage loans, like those backed by Fannie Mae and Freddie Mac.
As of July 5, about 4.1 million loans were in forbearance, according to the Mortgage Bankers Association. The percent of loans in forbearance backed by Fannie Mae and Freddie Mac was about 6 percent, while those backed by Ginnie Mae was about 10.56 percent.
The relief provisions allow individuals to request forbearance for 180 days with the option of extending the pause for an additional 180 days.
People who took advantage of the forbearance option will be required to repay those amounts and they generally have a number of ways to do so depending on your loan.
Overall, people with loans backed by the GSEs will not be required to make payments in a lump sum.
As noted by the Consumer Financial Protection Bureau, if you can afford to raise your monthly payment slightly each month, you can opt to pay back the balance over time.
You may also be able to defer your payments until you sell or refinance the home, or until the end of the loan.
If your financial circumstances changed throughout the pandemic, you may be able to modify the terms of your loan to work out a payment schedule that is affordable.
You should communicate with your servicer about your options and which is right for you.
