Bankrate Guide: Everything You Should Know About Mortgage Forbearance
Can I sell my home during forbearance? Will mortgage forbearance hurt my credit? A new online guide from Bankrate covers essential forbearance questions borrowers may have.
October 2020 – About 3 million Americans are in mortgage forbearance plans as of October 2020, which allow them to temporarily stop making payments, according to data firm Black Knight. As the coronavirus pandemic continues to jolt the economy, more people will face financial difficulty, including how to pay their monthly mortgage bill.
“The forbearance program is obviously designed to deal with the characteristics of this pandemic. This isn’t related to mortgage underwriting or a downturn in the economy — it’s a sudden disruption that’s believed to be temporary in which people can resume their normal life,” says Ed DeMarco, president of the Housing Policy Council (HPC). “Forbearance is a normal tool in the toolkit, it’s been used with some regularity with natural disasters, or any temporary emergency which disrupts normal living and income.”
In July, about 8.5 percent of all active mortgages were in forbearance, though the number has come down a bit since then. The mortgage forbearance program under the CARES Act technically applies only to loans backed by Fannie Mae and Freddie Mac, or those issued by the FHA and VA loans, but many private lenders have voluntarily extended forbearance protections as well.
Going into forbearance might seem daunting for many borrowers who are already facing financial problems they didn’t expect or plan for, but it’s really meant to be a lifeline in those situations. Understanding the basic facts might help alleviate some of the worry.
A new online guide from Bankrate covers essential forbearance questions borrowers may have:
What is mortgage forbearance?
What does forbearance mean under the CARES Act?
What happens if you’re not protected under the CARES Act?
Can people go from a private mortgage to a government-backed mortgage?
Does mortgage forbearance hurt your credit?
Do borrowers pay extra interest if they get a forbearance?
Can you refinance your mortgage during forbearance?
Can you sell your home during forbearance?
Are rental properties or second homes eligible for forbearance?
Can you get a forbearance if you have a home equity loan or HELOC?
Source: Bankrate