Is the COVID-19-related payment suspension (also known as a forbearance) on your home loan ending? Ready to resume making mortgage payments? Understanding your options and being proactive can help ensure a smooth process, say experts. “Loan servicers are currently reaching out to customers through emails, letters and calls to help them with exiting forbearance. Responding to this outreach promptly is crucial,” says Rulon Washington of Wells Fargo, who’s worked with nonprofits throughout the pandemic to educate homeowners on what they’ll need to do as their forbearance plans come to an end.
Below, Washington answers common questions homeowners have when exiting their forbearance:
Can I move missed payments to the end of the loan term? In most cases, if you were current on your mortgage or home equity payments when the suspension started and are ready to resume your regular monthly payments, you may be able to move missed payments to the end of the existing loan term. This additional balance won’t accrue interest and will be due when the loan is paid in full, refinanced, or when the home is sold.
What other options are available? You may have the option to pay off missed payments in full or follow a repayment plan, which divides what’s due into manageable amounts, and adds it to the regular monthly payment.
What if I need help with a lower monthly payment? If you need a reduced payment, you may qualify for a loan modification. Wells Fargo and several investors provide streamlined, no-document modification review processes in many cases.
What if I can’t afford reduced payments and need to sell? Your loan servicer can work with you as you attempt to sell your home, and in many cases, enable you to take advantage of the strong increases in U.S. home prices.
Who controls how my loan is handled? Many loans are insured, guaranteed or owned by third-party “investors” who set the rules for how loans are managed. Investors include government-sponsored enterprises, like Fannie Mae or Freddie Mac, government agencies, such as FHA, VA or USDA, banks and private companies. While many investors offer similar programs to help homeowners coming to the end of a payment suspension, exact programs may vary.
Will my home be foreclosed if I stay in forbearance or can’t resume payments? Servicers will not move to foreclosure or eviction on anyone who remains in an active, approved payment suspension plan. In the case of Wells Fargo-owned loans, all foreclosure-related activity and evictions have stopped on occupied properties through the end of 2021, except in very specific cases. For loans Wells Fargo services for other investors, we follow the investor’s requirements for customers as they exit payment suspensions. “We’ll make every effort to reach out to customers to discuss deferral of missed payments, modifications and other available programs before advancing or initiating foreclosure,” says Washington. What if I’m exiting a COVID-related forbearance but have been impacted by a natural disaster? Contact your loan servicer for options during this difficult time.
No-cost housing counseling agencies approved by the U.S. Department of Housing and Urban Development can help assess your situation, navigate available programs and even work with your servicer on your behalf. To find an approved agency, call HUD toll-free at 1-800-569-4287 or visit www.hud.gov/counseling.
Additionally, states, U.S. territories and Native American tribes are being granted federal funds designated for helping qualified homeowners address payments missed during a suspension and with payments going forward. Check with the appropriate housing finance agencies or contact a housing counseling agency for information about when these funds may be available and to determine if you might qualify for assistance.
Finally, Wells Fargo mortgage and home equity customers can find additional information at wellsfargo.com/repaymentdetails or can call 800-219-9739 to speak to someone who can help review their circumstances. “If your payment suspension is ending, help is available. Be sure to contact your mortgage servicer for next steps,” says Washington. (StatePoint)