My Mortgage Forbearance Ended. Now What?

The COVID-19 pandemic brought about serious financial and health challenges for many American households. A significant number of individuals and families were unable to keep up with their mortgage payments. To cushion the effect, the government provided mortgage forbearance relief for the affected homeowners. According to Forbes, there are an estimated 1.6 million homeowners currently in various phases of forbearance. Once the mortgage forbearance program ends, homeowners will have to decide how to repay their suspended home loan payments.

At Oliva Law Bankruptcy, we are dedicated to offering comprehensive legal guidance and strong advocacy to clients in bankruptcy and COVID-19 forbearance-related matters. As your legal counsel, we can review your unique financial situation and help you understand the various repayment options available to you once your mortgage forbearance ends. Our experienced Texas bankruptcy attorneys will help you craft a strategic plan to exit mortgage forbearance seamlessly, pay back the mortgage, and avoid foreclosure. We proudly serve clients in McAllen, Brownsville, Harlingen, Corpus Christi, and throughout the Rio Grande Valley, Texas.

Understanding Mortgage Forbearance

Mortgage forbearance can be described as a temporary modification on your mortgage (or home loan) payment obligations. It involves reducing or suspending your mortgage payments entirely. In 2020, millions of homeowners sought mortgage forbearance under the COVID-19 relief acts. This allowed borrowers to pause their home loan payments for a period of time due to economic hardship.

Under the CARES Act, homeowners were entitled to an initial 180 days of forbearance, followed by an additional 180-day extension. Once you exit the mortgage forbearance program, you will have to continue with your loan repayments as well as the accrued interests.

My Options Now That Forbearance Has Ended

If your forbearance period has ended, here are the available repayment options:

Repayment Plan: This involves proposing a repayment plan to your lender or creditor. Through the repayment plan, you are able to pay back your missed payments over an agreed period of time with increased monthly mortgage payments.

Deferral or Partial Claim: Deferral or partial claim allows you to resume your regular monthly mortgage payments with the missed payments transferred to the end of the loan or after selling or refinancing your home.

Loan Modification: A home loan modification allows you to change the length, principal amount, or interest rates on your mortgage. This way, you can make your mortgage payments even more affordable.

Mortgage Reinstatement: Mortgage reinstatement allows you to restore your mortgage after the forbearance period ends by paying the total amount past due through a lump sum payment. Mortgage reinstating can help stop a foreclosure on your home.

Repayment Options for Various Agencies

Repayment options often vary between agencies depending on the suspended amounts. Here are the repayment options for various agencies:

Fannie Mae & Freddie Mac loans:

  • Repayment plan
  • Payment deferral
  • Loan modification

FHA/HUD loans:

  • COVID-19 Recovery Standalone Partial Claim
  • COVID-19 Recovery Modification

USDA Rural Housing Service Guaranteed Loan Mortgages:

  • Affordable repayment plan or term extension
  • Payment deferral

VA loans:

  • Repayment plans
  • Loan modification

For non-federally backed loans, ensure that you check with your loan servicer to know the forbearance repayment options that are available to you.

New Rule to Avoid Foreclosure

The Consumer Financial Protection Bureau (CFPB) issued new rules to protect struggling homeowners and ensure that they have the opportunity and enough time to avoid foreclosure. Here are some important provisions of the new rule:

  • The borrower must complete and submit a loss mitigation application before any foreclosure can start. This must be thoroughly reviewed by the loan servicer.
  • Before starting foreclosure proceedings, the loan servicer must confirm that the property is abandoned under local and state laws.
  • Loan servicers must make reasonable efforts to get in touch with the borrowers before starting any foreclosure proceedings.
  • Loan servicers must give homeowners up to three or more options to avoid losing their homes.

These new rules will be in effect from August 31, 2021, to January 1, 2022.

Let Oliva Law Bankruptcy Help

Making suitable preparation for when your mortgage forbearance ends is important. As your forbearance period draws to a close, you need to be well-informed and adequately prepared for repayment of your mortgage payment that was previously suspended due to COVID-19 economic hardship. An experienced bankruptcy attorney can enlighten you about your legal rights and evaluate your available repayment options.

At Oliva Law Bankruptcy, we have the experience and resources to assist and guide clients when exiting the mortgage forbearance program. As your legal counsel, we will help you understand your available repayment options and enlighten you about the benefits and drawbacks of each option. Whether you want to continue making mortgage payments, defer payments, modify your home loan, or sell your property, we can offer you the experienced legal counsel you need to navigate important decisions. Our team will craft an effective strategy to help you avoid foreclosure and stay on track with your financial goals.

Contact Oliva Law Bankruptcy today to schedule a simple consultation with experienced bankruptcy attorneys. Our team can provide the knowledgeable legal guidance and brilliant advocacy you need to make informed decisions. We are proud to serve clients in McAllen, Brownsville, Harlingen, Corpus Christi, and throughout the Rio Grande Valley, Texas.


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