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Pandemic-related financial hardship and mortgage forbearance

Posted on May 28, 2020 at 6:00 am

By Ree West

If you’re experiencing financial difficulties right now, you’re not alone, and you have some options.

It should come as no surprise, though, that as quickly as support services are being put into place, scammers are coming up with strategies to take advantage of them. So I caution you to be careful and vet your information sources as you search for solutions, to avoid falling prey to a scam.

When it comes to finding information about managing your finances at this difficult time, the Consumer Financial Protection Bureau (CFPB) is a reliable source.

Mortgage Forbearance is one provision of the Federal CARES Act that can help if you’re struggling to make your mortgage payment due to hardships related to the pandemic. Forbearance is when your lender or mortgage servicer allows you to pause or reduce your payments for a limited amount of time. It doesn’t erase what you owe, but it will give you time to make your payment without additional fees, penalties, or interest in addition to your regular rate.

Under the CARES Act, if you have a federally backed mortgage such as those from FHA, VA, USDA, Fannie Mae, and Freddie Mac, you have the right to request forbearance for up to 180 days. Your regular interest does still accrue, so if you can still make payments, it’s best to do so because you will have to get caught up eventually.

If you can’t afford to make your entire next mortgage payment, though, contact your mortgage servicer as soon as possible. There should be contact information for your loan servicer on your monthly statement.

Once you get in touch with them, be sure to ask questions about the forbearance:

  • How will you have to pay the owed amount? Will you have to pay in one lump sum after the pause period? Will the payments be added to the end, extending your loan term?
  • Can your loan term be extended so that missed payments can be added to the end of your mortgage?
  • After the forbearance period, will your monthly payments be higher for a while to make up for the owed amount?

The CFPB produced this short video to explain Mortgage Forbearance.

If you receive a robocall (a call with a recorded voice or message) offering a lowered interest rate or mortgage assistance, hang up. This is most likely a scam attempting to get your money and personal information with the goal of stealing identities and committing fraud.

You can find more guidance about this and other topics at the Consumer Financial Protection Bureau’s website.

Ree West is the Community Librarian at the Deer Park Library and a member of the Library District’s Business and Career Development team, who loves helping young people prepare to enter the job market. Ree doesn’t sit still very well and has discovered that audiobooks are amazing and knitting or crocheting helps make movies a lot more interesting. When not inside a library, Ree likes to get out in nature via canoe, sailboat, or kayak (or just in her hiking boots)—it’s entirely possible that she just might run away to the sea someday.

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