How mortgage forbearance works from the CARES Act


RALEIGH, N.C. (WNCN) – With the pandemic still affecting the economy, many people are still having trouble meeting their bills.

One of the biggest bills can be the mortgage on your home. 

Six months ago, Congress created the CARES act, which loosened the rules to allow homeowners to apply for a type of mortgage relief. 

When COVID-19 swept across the country, it devastated many people’s finances, forcing nearly 4-million homeowners to look for relief in the form of mortgage forbearance. 

“It allows the borrower to pause making their mortgage payments for a period of time – up to 12 months – to get yourself back on your feet again,” said Kevin Palmer, a senior vice president with Freddie Mac.

Once you are done with forbearance, you have several options. 

They include:  

  • Repayment plans, allowing you to catch up gradually. 
  • Modifications of the loan 
  • Payment Deferrals

“The most common option for homeowners at the end of forbearance is payment deferral,” said Palmer. “This is where missed payments are deferred to the end of the mortgage and there are no interest charges and no fees.” 

When Congress created the CARES Act, it provided protection for borrowers with federally-backed mortgages.

Although nearly 4 million people took advantage of the program, figures indicate 25 percent of homeowners have already transitioned back to regular payments. 

Palmer said, since people have up to 12 months to defer mortage payments, they should people shouldn’t rush getting off the forbearance process and wait until they can make sure they are financially secure. 

“You want to make sure when you get off forbearance you feel liker you can be successful and make those mortage payments,” he said. 

Under the CARES Act, if the borrower requests a forbearance, a servicer must give it to them without any additional documentation. In this case, your word is your bond. 

One more thing: don’t worry about your credit rating if you request forbearance. 

It will not negatively impact your credit, but your lender will report it to the credit bureaus.

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