What is Forbearance?
- Part of the CARES act enacted in March of 2020
- Allows home owners to defer 12 months of mortgage payments due to hardships
- Was then extended 6 more months
- Last time to Apply is June 30th 2021
Example: So if someone hard started forbearance in April 2020, it would have expired April 2021 but now it is extended to October 2021
How to get out of Forbearance?
To then get out of forbearance you can
- Start making normal payments again – The months you missed are added to the end.
- Work with your lender or companies like lowermybills.com to modify your home loan
A few more details about forbearance here: www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/learn-about-forbearance/
So how many folks are in forbearance? As of April 6, 2021 we are at 2.3M mortgages about 4.4% of the 52M mortgages in the U.S.
You can see in the chart below it’s been declining
Are more foreclosures around the corner?
You never know what’s going to happen but I am thinking an increase will be minimal. For two reasons
- We enacted tougher controls after the 2008 financial crisis – though not perfect it has strengthened the financial foundation of housing investments – No more NINJA loans (no income, no job, no assets)
2. Home prices are at all time highs and interest rates at all time lows. – Instead of foreclosure many home owners can opt to sell the home to pay the mortgage and walk away with the difference.
If you are interested in refinancing your home loan to either get out of forbearance or to lower your monthly payments take a look at lowermybills.com they have the best offers.