Impact of Mortgage Forbearance

05/08/20

I hope everyone is staying safe and healthy during these trying times. We are living in tremendous uncertainty; countless people are worried that they will not be able to meet their monthly financial obligations, including their mortgage payments.   

Due to the ongoing economic crisis, residential and commercial property owners have been entering into mortgage forbearance agreements with their mortgage banks. These agreements are crucial during these difficult times, as they allow property owners to miss mortgage payments without any  repercussions, such as accrued penalties and interest, as well as negative impacts to one's credit. While forbearance agreements certainly have their limitations - they merely delay payment requirements, rather than forgive them - delaying payment requirements provides property owners with the opportunity to coordinate financing and seek other avenues of revenues as the economy begins to open.  

With forbearance agreements, the key concern is what happens once the forbearance period expires. During the beginning of the economic crisis, mortgage banks initially advised borrowers that when the forbearance period expired, they would be obligated to pay the full amount of mortgage payments, which had accrued during the forbearance period.  However, it was clear that the eventual accrued bulk payments would be very difficult for most people to handle. Therefore, further developments in the field have transpired acknowledging and addressing the financial burden property owners are facing. In particular, Fannie Mae and Freddie Mac loans will be shifting the accrued bulk amounts due to the end of the loan. It is vital that every property owner holding a mortgage contact their mortgage servicing company to confirm that their mortgage is backed by either of those institutions or that the lender has agreed to follow a similar protocol. This development will certainly ease the stress that property owners are under during these trying times. 

It is important to note that if you are facing financial difficulties and cannot pay your mortgage, you should immediately avail yourself of this forbearance option. Forbearance agreements are easily attainable and vital for your economic future, as these agreements will protect your largest financial assets, whether they be your business or your home.  

Our firm has remained abreast of all of these developments. Please feel free to call us with any questions you may have.