How to Get a COVID-19 Mortgage Forbearance Extension

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How to Get a COVID-19 Mortgage Forbearance Extension

If the original COVID-19 mortgage forbearance arrangement is about to end, you should be aware that although you could be eligible for an extension, it is not guaranteed. Your current Coronavirus, Aid, Relief and Economic Security (CARES) Act forbearance agreement must be extended before it runs out.

Under the CARES Act, which was enacted on March 27, 2020, mortgage forbearance in relation to COVID started. The requirements and the date for submitting an application for the first COVID-related mortgage forbearance have altered as a result of subsequent legislation.

June 30, 2021

The cutoff date for first COVID-related mortgage applications for HUD/FHA, USDA, or VA loans. For loans supported by Freddie Mac or Fannie Mae, there isn’t presently a deadline for submitting an application for first forbearance.

Repaying Your Original Mortgage Forbearance

Consider your financial status when the initial mortgage forbearance period comes to an end. By all means, consider that alternative if you are able to continue payments of any magnitude. Your probable choices, which change depending on the kind of loan, might be any of the following:

  • Lump-sum payment
  • Intermittent payments
  • Lengthened loan term
  • Payment deferral
  • Loan modification

Your delayed loan amount may be paid in one single sum, but it is not necessary. In reality, lenders cannot compel you to make a lump sum repayment of your CARES Act forbearance.

A mortgage forbearance extension may be used if none of the other choices are workable. You may catch up on other expenses or just “tread water” while waiting for your financial situation to get better with the help of a forbearance extension, which provides you extra months of postponed payments.

Key Takeaways

  • Anyone with a home loan guaranteed by the federal government is eligible for up to 360 days of full or partial deferral on mortgage payments under the CARES Act.
  • The first forbearance period may be up to 180 days, with one extension of 180 days.
  • If your original forbearance started on or before February 28, 2021, and your loan is supported by Fannie Mae or Freddie Mac, you may ask for an extra six months of forbearance.
  • You may ask for up to six more months of forbearance if your loan is HUD, FHA, USDA, or VA-backed and your original forbearance started on June 30, 2020, or earlier.
  • Both the first forbearance and subsequent renewals must be requested; they are not granted automatically.
  • Contact your loan servicer to request a forbearance extension or an initial forbearance.
  • For the vast majority of consumers, forbearance avoids foreclosure by preventing delinquency.
  • A lot of private lenders also provide forbearance linked to COVID-19, however the terms and circumstances differ.
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Requesting a Mortgage Forbearance Extension

The CARES Act allows homeowners with federally insured mortgages who are adversely impacted financially by the coronavirus pandemic to temporarily suspend (forbear) all or part of their mortgage payments for up to 180 days. If the borrower requests it before the original forbearance ends, the CARES Act also allows for a forbearance extension of up to 180 days.

You may also ask for up to an additional six months of forbearance for a total of 18 months if your Fannie Mae or Freddie Mac-backed mortgage was in COVID-19 forbearance on or before February 28, 2021. You may also ask for an extra six months of forbearance if your HUD, FHA, USDA, or VA-backed loan was under COVID-19 forbearance on or before June 30, 2020.

Before your current forbearance or extension expires, you must get in touch with your loan servicer to ask for another one. Not everyone will be eligible for the most extensions. Don’t wait until the last minute to speak with your loan servicer and consider your choices in order to prevent a panic scenario.

Loans Eligible for Forbearance Under the CARES Act

Mortgage loans guaranteed by the federal government and sponsored companies are subject to CARES Act forbearance (and foreclosure avoidance), which is defined as loans:

  • Federal Housing Administration-backed insurance (FHA)
  • Home equity conversion mortgages managed by the U.S. Department of Housing and Urban Development are covered under section 255 of the National Housing Act (HUD)
  • guaranteed under the Housing and Community Development Act of 1992’s (HCAD) (section 184 or 184A), which focuses on housing for American Indian and Native Hawaiian people
  • provided by the Department of Veterans Affairs as a guarantee or insurer.
  • manufactured, warranted, or guaranteed by the Department of Agriculture
  • by the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association purchased or securitized (Fannie Mae)

Request Your Extension Through Your Loan Servicer

Start by getting in touch with your loan servicer if forbearance on your federally insured loan is set to end and you are still unable to start making full (or any) payments. It is this business that sends you a statement each month and takes your money. Your servicer’s name and contact details have to be included on your monthly bill.

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Before the end of your existing forbearance or extension, your servicer should inform you of your alternatives. If not, be sure to speak with your servicer and request an extension.

You may get in touch with your service provider via phone, email, or through their website. It is a good idea to check the website for updates on all mortgage relief possibilities before getting in touch. According to the CARES Act, seeking a forbearance extension is a straightforward process:

Such forbearance “must be given for a term not to exceed 180 days and shall be further extended for a period not to exceed 180 days at the request of the Borrower.”

The CARES Act merely stipulates that you “must” ask for and be granted an extension.

Get Everything in Writing

The Consumer Financial Protection Bureau (CFPB) advises that even though the law does not mandate that you submit your request in writing, you should “ask your servicer to provide written documentation that confirms the details of your forbearance agreement and that you are clear on what the terms are” when you secure forbearance.

As with your first appeal for tolerance, keeping in mind that:

  • You just need to provide proof that you are experiencing financial difficulty because of the epidemic to be granted the extension.
  • No more fines, penalties, or interest (beyond scheduled amounts) will be charged to your account while you are in forbearance.
  • At any moment, you are free to end the forbearance and start paying payments again.

Private Lender Forbearance Extensions

If you have a forbearance arrangement with a private lender but don’t have a federally or GSE-backed mortgage, the lender may or may not give an extension or other mortgage relief. You need to get in touch with your servicer before your current forbearance ends, just as with a government-backed loan.

You need to be aware of the constraints that will be put in place after your present forbearance ends since the guidelines that apply to forbearance of government-backed loans will not apply in your instance. For instance, some private lenders want an immediate balloon payment of all past-due fees and interest. Talk to your servicer immediately away to see if an extension or another option is possible if that is the situation with your lender and you are really unable to make such a payment. Additionally, you may wish to inquire about possible relief possibilities with your state government.

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While You Are in Forbearance

Your attention should be on safeguarding yourself and being ready for life after mortgage relief while you are in forbearance by completing the following:

  • Keep a written record of the terms of your mortgage relief, including forbearance, on hand.
  • Keep an eye out for typos on monthly mortgage bills.
  • To comply with your forbearance agreement, stop or modify your automatic mortgage payments.
  • Check your credit report for mistakes and make sure your servicer is appropriately reflecting your status.
  • Plan with your servicer how you will pay back any money you owe before your forbearance or forbearance extension expires.

Forbearance vs. Foreclosure

Forbearance and foreclosure have a nuanced and sometimes misunderstood connection. Forbearance is a strategy to cope with your temporary inability to make mortgage payments and, in most situations, to prevent foreclosure while you are in the forbearance period.

President Biden’s executive order, issued on February 16, 2021, effectively places a freeze on foreclosures on all government-backed mortgages until at least June 30, 2021. Whether you are in forbearance or not, this still holds true.

With regard to federally and GSE-backed mortgages, there are several different ways to qualify for forbearance (and prevent foreclosure). You may do so even if your lender has already begun the foreclosure process against you if you are 30, 60, 90, or more days behind on your payments.

Your status is “frozen” during forbearance, which prevents foreclosure. Of course, this is just temporary. You will be susceptible to foreclosure as permitted by law after the period of forbearance expires.

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