Know Your Options if Your Home Loan Payment Suspension is Ending

Posted on June 25, 2022.

Is the COVID-19-related payment suspension (also known as forbearance) on your home loan ending? Ready to resume making mortgage payments? Experts say being proactive and understanding your options can help ensure a smooth process.

“Loan servicers are currently reaching out to customers through emails, letters and calls to help them with exiting forbearance. Responding to this outreach promptly is crucial,” says Rulon Washington of Wells Fargo, who’s worked with nonprofits throughout the pandemic to educate homeowners on what they’ll need to do as their forbearance plans come to an end.

Below, Washington answers common questions homeowners have when exiting their forbearance:

Can I move missed payments to the end of the loan term? 

In most cases, if you were current on your mortgage or home equity payments when the suspension started and are ready to resume your regular monthly payments, you may be able to move missed payments to the end of the existing loan term. This additional balance won’t accrue interest and will be due when the loan is paid in full, refinanced, or when the home is sold.

What other options are available? 

You may have the option to pay off missed payments in full or follow a repayment plan, which divides what’s due into manageable amounts, and adds it to the regular monthly payment.

What if I need help with a lower monthly payment? 

If you need a reduced payment, you may qualify for a loan modification. Wells Fargo and several investors provide streamlined, no-document modification review processes in many cases.

What if I can’t afford reduced payments and need to sell?

 Your loan servicer can work with you as you attempt to sell your home, and in many cases, enable you to take advantage of the strong increases in U.S. home prices.

Who controls how my loan is handled?

 Many loans are insured, guaranteed or owned by third-party “investors” who set the rules for how loans are managed. Investors include government-sponsored enterprises, like Fannie Mae or Freddie Mac, government agencies, such as FHA, VA or USDA, banks and private companies. While many investors offer similar programs to help homeowners coming to the end of a payment suspension, exact programs may vary.

Will my home be foreclosed if I stay in forbearance or can’t resume payments? 

Servicers will not move to foreclosure or eviction on anyone who remains in an active, approved payment suspension plan. In the case of Wells Fargo-owned loans, all foreclosure-related activity and evictions have stopped on occupied properties through the end of 2021, except in very specific cases. For loans Wells Fargo services for other investors, we follow the investor’s requirements for customers as they exit payment suspensions.

“We’ll make every effort to reach out to customers to discuss deferral of missed payments, modifications and other available programs before advancing or initiating foreclosure,” says Washington.

What if I’m exiting a COVID-related forbearance but have been impacted by a natural disaster? 

Contact your loan servicer for options during this difficult time.

Source: https://www.notarytoday.pro/industry-news/know-your-options-if-your-home-loan-payment-suspension-is-ending