One of the most common mortgage relief options is forbearance, which is offered through your loan servicer (the company listed on your mortgage statement). When entering forbearance, your mortgage payments are suspended until the end of the forbearance period.
If you are a homeowner experiencing financial hardship and cannot pay your Freddie Mac-owned mortgage as a result of the coronavirus (COVID-19), mortgage relief, including forbearance, is available.
But what happens when forbearance ends? Here are the facts to help you understand Freddie Mac forbearance during COVID-19 and how repayment will work:
If you've been affected, you are entitled to forbearance for 12 months. Servicers will start with a shorter plan and reassess at the end of the period to see if your financial situation has changed. However, if you are still unable to make your full payment, you are entitled to up to 12 months of forbearance if you request it.
Your payments are suspended in forbearance – but you must pay the money back in the future. During forbearance your mortgage payments are suspended until the end of the forbearance period, whether it's one month or 12. If you can make partial payments during forbearance, it will reduce the amount outstanding at the end of the forbearance period.
You are never required to pay back your forbearance in a lump sum. There are several options for you to repay the money you owe, based on what's best for you. These include:
Full repayment, known as reinstatement, where you pay back the missed payments.
Repayment plans, allowing you to catch up gradually while you are paying your regular monthly payment.
Resuming normal payment, when you can't afford an additional amount but can resume making your normal monthly payment, we can leverage alternative ways for you to pay back the suspended payments in a manner that is affordable.
Modification of the loan, when you have a sustained reduction in income resulting from the crisis, we can look at a modification (changes to the terms of your loan) that might suit your new circumstances; those changes will aim to reduce your original monthly payment amount.
Your loan servicer will reach out to you about 30 days before your forbearance plan is scheduled to end to determine which assistance program is best for you at that time—a repayment plan, loan modification, or even an extension of the forbearance period if needed.
Again, contact your loan servicer right away to discuss your situation and determine the option that works best for your circumstances.