Moving Forward: Beyond Forbearance
As COVID-19 continues to change our lives and impact our economy, you may come across confusing and contradictory advice, but we are here to highlight the facts. If you were current on your loan before you started a forbearance plan or another accommodation covered by the CARES Act, you will be reported as current to the credit bureau as long as you continue to make payments as required by the plan you’re set up in, or as long as no payments are required under the plan. You don’t have to repay the forbearance amount all at once upon completion of your forbearance plan.
What happens after a forbearance plan ends:
A forbearance plan doesn’t erase the amount you owe on a mortgage. At the end of the forbearance plan, you must repay missed amounts, but not necessarily all at once. You will not be charged late fees during your forbearance plan as long as you are performing according to the terms of the plan.
Option 1: Reinstatement
A reinstatement means that you pay the total forbearance amount all at once.
Resolve your delinquency
Catch up on your past due payments
Less damaging to your credit score than a foreclosure
Stay in your home and avoid foreclosure
Option 2: Repayment Plan
A repayment plan allows you to bring your mortgage current over a period of time (up to 12 months). A repayment plan is an agreement that provides you with an opportunity to repay the forbearance amount on your mortgage by making additional monthly payments along with your regular monthly mortgage payments.
Resolve your delinquency
Catch up on your past due payments over a period of time
Less damaging to your credit score than a foreclosure
Stay in your home and avoid foreclosure
Option 3: Payment Deferral
A repayment option that moves, or defers, past-due amounts to the end of your loan term and keeps your monthly principal and interest payment the same. (Note that escrow payment adjustments for taxes and insurance may affect your total monthly payment.)
Resolve your delinquency and bring your loan to a current status
Resume regular payments without immediate repayment of past-due amounts
Deferred amount does not accrue interest
Not due until the end of the note or sale
Stay in your home and avoid foreclosure
Option 4: Loan Modification
A loan modification permanently changes the terms of your original loan. It is intended to make your payments or terms more manageable, and typically results in a lower monthly payment. Examples of the terms that may be changed include the interest rate or the term of the loan. If you receive a loan modification, you’ll be required to complete a trial period plan where you’ll need to make trial payments on-time each month for a few months to ensure you can afford the new modified payment.
May reduce your monthly mortgage payments to a more affordable amount
Can extend the term of the loan
Less damaging to your credit score than a foreclosure
Stay in your home and avoid foreclosure