Not all lenders are offering “mortgage payment forbearance”, regardless if you’ve heard it from the politicians, or the media. Not all lenders are offering the same terms. Also just because you can, doesn’t mean you should.
Some lenders are offering multiple options in delaying mortgage payments. Note: all lenders require the borrower to request help, or submit an application. They won’t do it unilaterally. A borrower’s unilateral non-payment of a monthly payment will bring on credit issues, and penalties.
This is not free money!
The attached graphic reflects a standard forbearance. You hold off on the monthly payment for a specified amount of time, then all the payments are due at the end of the forbearance term in a lump sum. Length of forbearance can vary. During an agreed upon forbearance the borrower “should not” have a derogatory to their credit, or a late payment penalty.
* Credit scores may drop because consistent payment history will be diminished, and a future mortgage origination can be affected, as there is a most recent 12-24 month solid mortgage payment history underwriting guideline.
At the end of the forbearance period, the borrower may be given a modified loan, adjusting the repayment of the deferred amounts. At this point a modified loan may supply the borrower a credit hit, as the loan will not be “paid as agreed” per the original loan terms.
In 2009-2010 when some lenders were unilaterally passing out loan mods to borrowers, even when the borrower wasn’t asking for one, lenders didn’t disclose that there would potentially credit derogatory. It all depended on how the modification was entered into the credit companies systems. Note: during the last recession, a modification to principle was the same as a short sale in a new lender’s underwriting guidelines. A modification only in interest rate and/or repayment period would still be an issue, but not as bad. 24 months constant payments after any loan modification is generally required before a new “A” paper loan can be approved.
I’m telling my clients to get the loan forbearance options from their lenders, and before agreeing to terms, to call me, and lets go over the pros and cons. The forbearance may be a good option, given a borrower’s specific scenario.
Again… Just because you can, doesn’t mean you should.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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