The CARES Act offered much-needed mortgage relief for U.S. Homeowners. Under the Act, if you have any mortgage backed by the federal government you can pause your mortgage payments for up to six months with no penalties.
Today, 1 in 5 renters is behind on rent and just over 10 million homeowners are behind on mortgage payments. Californians facing financial hardship because of the COVID-19 pandemic are protected from eviction through the extended forbearance and foreclosure relief program.
The latest extension provides:
• Eviction protection for tenants who pay at least 25% of their rent through June.
• The bill also provides $2.6 billion in federal funds for rent subsidies that will help pay most past-due rent by low-income tenants dating back to last April.
• In cases in which landlords do not agree to forgive unpaid rent, the state would pay 25% of the rent in arrears.
- Extend the foreclosure moratorium for homeowners through June 30, 2021;
- Extend the mortgage payment forbearance enrollment window until June 30, 2021 for borrowers who wish to request forbearance;
- Provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.
“President Biden is committed to protecting homeownership and housing stability as America begins to turn a painful crisis into a robust recovery. Today’s extended forbearance and foreclosure programs are an important step towards building stronger and more equitable communities.” -whitehouse.gov
What to Do When Your Forbearance Expires?
Most mortgage borrowers aim to stay in their homes. There are a number of options for addressing short-term cash issues with your borrower and figuring out how to stay in place.
Remember, forbearance is not loan forgiveness, it’s just a pause in the payments. You will still need to make up the missed balance eventually! Your repayment plan is a big part of coming out of forbearance and remaining in your home.
Here are three options for exiting your forbearance:
•A lump sum payment, which means paying the entire amount you missed all at once.
- A short-term repayment plan or a loan modification, which is usually an additional monthly charge on top of your regular mortgage payment to make up that difference.
- A loan modification, which can mean changing the terms in any number of ways, including extending the repayment period, lowering the interest rate or even reducing the principal loan balance.
What if I Can’t Afford to Stay in My Home?
The worst-case scenario is forbearance ends and you still can’t pay your monthly mortgage. In this case, what do you do? This may mean selling your home if you can no longer afford it. Your lender or servicer may be able to help you on the road to your next living situation. They probably want to avoid foreclosing on your home almost as much as you do! If you’re not married to your home and you’re willing to move , there are a variety of options that are not foreclosure.
A lot of these borrowers have equity in their homes. They can sell their current houses and use that equity to help pay off their existing mortgage and possibly fund a down payment on a cheaper house, or at least put some money into savings after the sale.
Cash for Keys
Another option if they don’t want to proceed with the foreclosure route and they’re willing to move, there are programs like Cash for Keys,” in which the lender assumes the title of the home, but may provide the borrower with some relocation assistance to help them settle in a new, more affordable housing situation.
That’s when you sell your home, and even though the proceeds are not enough to pay off the full mortgage, the difference is essentially forgiven.
Don’t be afraid or embarrassed to ask for help if you need it! Call us at Delphi Realty today!
For comments or inquires contact:
Alex Khodadad, Broker, CPA
1930 Contra Costa Blvd.
Pleasant Hill, CA 94523
Source: bankrate.com, whitehouse.gov
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