Mortgage forbearance is a temporary relief option provided by lenders to help borrowers overcome short-term financial hardships. While it can be a lifesaver during tough times, it’s important to understand what happens when forbearance ends and what options are available to you. In this article, we’ll explore the ins and outs of mortgage forbearance, what to expect when it ends, and the various alternatives you can consider. If you need expert advice or assistance with your mortgage, contact O1ne Mortgage at 213-732-3074.

When Does Mortgage Forbearance End?

The duration of a mortgage forbearance period is typically negotiable but rarely exceeds 12 months. Most U.S. single-family mortgages conform to guidelines set by Fannie Mae or Freddie Mac, which limit forbearance periods to 12 months. The specific length of your forbearance period will be outlined in your forbearance agreement, based on your financial situation and when you expect to resume regular payments.

What Happens When Forbearance Ends?

When your forbearance period ends, you’ll need to make up for the payments that were excused. Here are the common ways to handle repayment:

Reinstatement

Reinstatement involves making a single lump-sum payment for the total amount excused during the forbearance period, plus any interest and fees. After reinstatement, you resume your regular mortgage payments.

Repayment Plan

A repayment plan divides the total amount excused during forbearance into installments, which are added to your regular monthly payments until the forgiven amount is repaid. The number of installments is negotiable but usually does not exceed 12 months.

Payment Deferral

If you can resume regular payments but cannot afford a lump-sum or repayment plan, a payment deferral may be an option. This attaches a lien for the missed payments to your house, which must be paid when you sell or refinance the property.

Mortgage Modification

A mortgage modification permanently changes your loan terms to reduce your monthly payment. The excused amount is added back into the total owed and factored into the new payment structure, potentially extending the repayment period and increasing the total interest paid.

Options After Forbearance on Government-Backed Loans

Government-backed mortgages, such as FHA, VA, and USDA loans, have specific guidelines for handling forbearance and repayment. Here are the options for each loan type:

FHA Loans

FHA loans offer informal or formal forbearance, special forbearance for unemployment, and options like advance loan modification, standalone partial claim, and recovery modification.

VA Loans

VA loans allow for reinstatement or repayment plans and offer additional assistance to avoid foreclosure. Borrowers can seek help from a VA loan technician at 877-827-3702.

USDA Loans

USDA loans provide options like payment subsidies and other assistance. Borrowers can call the USDA help line at 800-793-8861 for more information.

Other Alternatives to Consider After Forbearance

If you cannot resume regular payments or bring the loan current, consider these alternatives:

Refinance

Refinancing involves obtaining a new mortgage to pay off the original loan. This option is typically available after making at least three regular monthly payments on the original loan.

Sell Your Home

Selling your home and using the proceeds to pay off the mortgage may be a viable option. If you owe more than the home’s value, a short sale may be possible with the lender’s agreement.

Deed in Lieu of Foreclosure

In a deed in lieu of foreclosure, you turn over the property deed to the lender in exchange for debt settlement. This option can significantly impact your credit and may have tax implications.

The Bottom Line

Mortgage forbearance can provide temporary relief during financial hardship, but it’s essential to understand the terms and plan for repayment. If you need assistance with your mortgage or refinancing, contact O1ne Mortgage at 213-732-3074. Our experts are here to help you navigate your options and find the best solution for your needs.