Once you have contacted your servicer and know the options available to you, here are the steps to request mortgage relief.
1. Ask your mortgage service for forbearance
Mortgage relief is not automatic. You will need to reach out to your servicer to request mortgage relief. If your loan is backed by HUD/FHA, VA, USDA, Fannie Mae, or Freddie Mac, you can qualify for forbearance by explaining you have a COVID-related financial hardship. For other loans, ask your mortgage servicer for relief options and what the eligibility requirements are. Ensure that you research all available options to find one that is right for you.
2. Monitor your mortgage loan while in forbearance
Once your mortgage servicer has granted you mortgage relief, be sure to stop or change your mortgage auto-payments. Confirm that your property taxes and insurance are still being paid. Your servicer should be paying those expenses out of an escrow account. If it does not have one, then you will be responsible for paying them. You are also responsible for any HOA or condo fees. If the escrow account is low when you get close to leaving forbearance, you may have to pay into it.
Keep an eye on your credit report since your servicer is required to report your mortgage as current while in forbearance. If you do not make payments before your account is in forbearance, then you may be considered delinquent. Lastly, continue to monitor your monthly mortgage statement to ensure everything is up to date and there are no errors.
3. Extend your forbearance if you need more time
COVID hit many families hard. If you are in forbearance under the CARES Act, you can request an extension if you are still facing financial hardship. You must contact the servicer to request it.
- Fannie Mae or Freddie Mac: You may request two additional three-month extensions, up to a maximum of 18 months of total forbearance. But to be eligible, you must have been in an active forbearance plan as of Feb. 28, 2021.
- HUD/FHA, USDA, or VA: You may request up to two additional three-month extensions, for up to a maximum of 18 months of total forbearance. But to be eligible, you must have requested a forbearance plan on or before June 30, 2020.
You may be able to extend forbearance for other servicers. You will need to contact them for the options that are available to you. Many offer the same extension options to all homeowners. Forbearance extensions may differ by servicers, and not all borrowers will qualify.
4. Exit your forbearance
Your servicer will notify you when you are close to the end of your forbearance. The next step is to learn about your repayment options. There are several ways you can make up for your missed payments. The method of repayment will vary depending on the loan, and you may or may not be eligible for all options. Your servicer will be able to explain the options available to you.
- Repayment plan: A portion of what you owe is added to your monthly mortgage payment. If you can afford to pay more than your regular mortgage for a period of time, then this may be best for you.
- Deferral or partial claim: The amount you owe is moved to the end of your loan or is added as a subordinate lien that needs to be paid when you sell, refinance, or end your mortgage. If you can’t afford to pay more than your regular mortgage, then this may be best for you.
- Modification: If you still can’t afford to pay your mortgage, your payment can be reduced to an amount you can afford. Your missed payments will be added to what you owe. Your monthly payment may be lower, but it will take longer to pay off your mortgage. This option may be best if you can no longer pay the regular monthly payment.
- Reinstatement: Most servicers will not request a lump sum payment for the missed payments. If you want to pay back your missed payments at once, this option may be best for you.
Each federal agency and servicer will have different repayment options. Talking to your servicer can help you find the best option for you.