Mortgage Protection Has Ended. Where Does That Leave You?

With the ongoing COVID-19 pandemic threatening the overall stability of the American people and economy, President Biden announced Feb. 16, 2021, that the White House would institute a new forbearance and forclosure protection program for homeowners: the CARES Act.

Of course, such a program is not intended to last forever.

Thus, you may be wondering: “What do I do now that this program, which was designed to protect homeowners like me, has expired?”

If You’ve Returned to Reliable Income

“If your money situation means you can pay your mortgage again, it is time to exit forbearance,” the Consumer Financial Protection Bureau (CFPB) explains. “Because you need to stay current and also repay the paused payments, your next step is to talk to your servicer or a housing counselor.”

Specifically, homeowners who find they are stable and ready to exit forbearance may opt to repay all of the loans at once in one lump sum.

Others may instead apply for a repayment plan. In such a scenario, they would pay their loan installments over the course of 3 to 12 months, depending on their situation. These monthly payments would be in addition to their existing monthly mortgage payments until all of the missed payments have been made up.

Once the money has been paid back, the homeowner(s) will resume paying only their original monthly mortgage payments.

In the Event of Persistent Instability

If you find yourself unwittingly exiting forbearance with nothing but trepidation, the first step is to take a deep breath and remember you’re not alone

In fact, “in February 2021, about 2.4 million borrowers had missed 2 or more payments—the equivalent to about 90% of the 2.7 million mortgages in forbearance.” according to the U.S. Government Accountability Office (GAO).

Consequently, you may be wondering what your options are. Two of the first options you’ll be presented with include:

• Loan Modification: “A loan modification permanently changes the original terms of your mortgage,” as explained by loan servicer Fannie Mae. “Although a loan modification may lower your monthly payment, it may result in paying more interest over the life of the loan due to the extended repayment term.
• Loan Deferral: Resume your previous mortgage payments as usual and then put the missed payments that occurred under the CARES Act either at the end of your loan or when you either sell or refinance their home.

Don’t Expect Disaster, Call Dolaghan Law

Note, however, that if none of the above are applicable to your situation, foreclosure may be on the horizon.

That being said, if you were previously protected by the CARES Act but now find yourself financially vulnerable following its expiration, bankruptcy may provide you with the lasting relief you’ve long sought.

Most often, the forbearance repayment options are not feasible for those who took the forbearance. Thus, Chapter 13 bankruptcy is an option to allow you, the borrower, to get current on your loan with court protection before a foreclose is even filed.

In other words, Chapter 13 bankruptcy can be a key step in preventing foreclosure, thereby offering you the ability to stay one step ahead and save your home — and Dolaghan Law can help.

Are you ready to learn more about foreclosure prevention and the fresh start bankruptcy provides? Then contact Dolaghan Law today by calling (904) 354-4935! Remember, you’re not alone.