The Covid-19 Coronavirus has led to some challenging times for all of us. The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law by President Trump on March 27th, 2020. The largest-ever economic stimulus package in U.S. history, the CARES Act provides more than $2 trillion in economic relief to American workers, families and small businesses who have been impacted by the COVID-19 crisis. One of the components of the CARES Act is the possibility of mortgage forbearance for homeowners with federally-backed mortgages.
Forbearance is often misinterpreted. Forbearance, specifically, is short-term payment relief for customers who are willing to make their monthly payments, but who may be facing temporary, unforeseen financial problems. Please note that forbearance is not payment forgiveness.
With a forbearance agreement, the lender agrees to a temporary suspension of your mortgage payments for a period of times, specifically tailored to your needs, generally with an initial forbearance period of not more than three months. During that period, you do not have to make any payments. In exchange, you must agree to resume making the full payment and pay the full amount of the payments which were not collected during the forbearance period in full at the end of the forbearance, unless another repayment agreement or loan modification has been agreed to by both you and the lender.
If you are experiencing hardship as the result of COVID-19, please contact your lender. They may be able to provide options based on your personal situation.
Thanks to Teresa Tubbs at Loan Depot for providing information for this article.