If you’re nearing the end of your initial COVID-19 mortgage forbearance agreement, it’s essential to be proactive about seeking an extension. While extension eligibility exists, obtaining one isn’t automatic—you must request it before your current CARES Act forbearance expires.
The initiation of COVID-related mortgage forbearance began with the CARES Act, enacted on March 27, 2020. Subsequent legislation has altered regulations and deadlines for applying for initial COVID-related mortgage forbearance.
The deadline for requesting initial COVID-related mortgage forbearance for HUD/FHA, USDA, or VA-backed loans is June 30, 2021. Notably, there is currently no deadline for initial forbearance application for loans supported by Fannie Mae or Freddie Mac.
Repaying Your Original Mortgage Forbearance
As you approach the conclusion of your initial mortgage forbearance period, assess your financial standing. If you are able to resume payments, consider doing so. Depending on your loan type, you may have several options available, including:
- Lump-sum payment
- Intermittent payments
- Extended loan term
- Deferred payments
- Loan modification
While a lump-sum repayment is permissible, it’s not mandatory. Lenders are prohibited from mandating immediate repayment of your CARES Act forbearance amount.
If none of these options are feasible for you, a mortgage forbearance extension offers additional months of deferred payments, providing breathing room to manage other expenses until your financial situation improves.
Requesting a Mortgage Forbearance Extension
The CARES Act permits homeowners with federally backed mortgages affected by the pandemic to avail an initial 180-day forbearance of all or part of their mortgage payments. An extension of up to 180 days is also granted if requested prior to the expiration of the initial forbearance period.
For Fannie Mae or Freddie Mac-backed mortgages in COVID-19 forbearance by Feb. 28, 2021, up to six additional months of forbearance can be requested, extending the total forbearance period to 18 months. Similarly, for HUD, FHA, USDA, or VA-backed loans in COVID-19 forbearance by June 30, 2020, an extra six months of forbearance can be sought.
To secure an extension, contact your loan servicer before your existing forbearance or extension concludes. Not everyone qualifies for the maximum extension, so it’s advisable not to wait until the last minute to explore your options.
Loans Eligible for Forbearance Under the CARES Act
The CARES Act’s forbearance and foreclosure prevention provisions pertain to mortgage loans backed by the federal government and sponsored enterprises. These encompass loans:
- FHA-insured
- Section 255 NHAct home equity conversion mortgages administered by HUD
- Section 184 or 184A HOCD Act guaranteed homes
- VA guaranteed or insured homes
- Department of Agriculture guaranteed, insured, or made homes
- Freddie Mac or Fannie Mae purchased or securitized homes
Request Your Extension Through Your Loan Servicer
If your federally backed loan’s forbearance is ending and you’re still unable to make full payments, contact your loan servicer, the entity managing your loan payments, before your current forbearance period concludes. Your servicer should inform you of available options prior to forbearance expiration. If not, take the initiative to reach out and request an extension.
You can reach your servicer via phone, email, or their website. Checking the servicer’s website for updated mortgage relief information before initiating contact is advised. The CARES Act outlines the straightforward process of obtaining a forbearance extension:
“Such forbearance shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower.”
The CARES Act stipulates that an extension can be requested by the borrower, and must be granted.
Get Everything in Writing
Although a written request is not mandatory, the Consumer Financial Protection Bureau (CFPB) advises obtaining written documentation confirming the terms of your forbearance agreement to ensure clarity on the agreement details.
Remember that:
- No additional documentation is typically required for an extension beyond proof of pandemic-related financial hardship.
- There are no extra fees, penalties, or interest accrued during forbearance.
- You retain the flexibility to end forbearance and resume payments at any time.
Private Lender Forbearance Extensions
For non-federally backed or GSE loans with forbearance agreements, private lenders may offer extensions or alternative forms of relief. Just as with government-backed loans, reach out to your servicer before your current forbearance concludes to understand the post-benefits conditions.
Since rules differ for private lender forbearance, be attentive to the terms upon expiration of your current forbearance. Some private lenders may demand immediate repayment, including past-due amounts and interest. If this poses a challenge, promptly communicate with your servicer to explore available solutions or potential extensions. State-level relief options should also be considered.
Mortgage lending discrimination is unlawful. If you suspect discrimination based on various factors, you can report it to relevant authorities like the CFPB or HUD.
While You Are in Forbearance
While in forbearance, maintain documentation of your mortgage relief terms, verify monthly statements, adjust auto-payments, monitor credit reports for accuracy, and plan repayment with your servicer before the end of forbearance or extensions.
Forbearance vs. Foreclosure
Forbearance offers temporary financial relief and foreclosure prevention for mortgage payment challenges. Under President Biden’s executive order, foreclosure on government-backed mortgages is halted until at least June 30, 2021, irrespective of forbearance status.
Eligibility criteria for government-backed mortgage forbearance and foreclosure avoidance are broad, allowing entry into forbearance even with arrears or ongoing foreclosure activity. During forbearance, foreclosure is suspended, providing temporary protection, although resumption of payments is required post-forbearance, else foreclosure actions may proceed.