The White House is extending Forbearance and Foreclosure protections through June. Originally, both protections were going to disappear at the end of March. However, mortgages backed by the Department of Housing and Urban Development, Department of Veterans Affairs, and Department of Agriculture will be protected through June. In addition, homeowners will also have until the end of June to request forbearance. This allows them to pause monthly payments.
Homeowners who entered forbearance before June 30, 2020 are entitled to six additional months. Originally, homeowners could only receive up to 12 months, split up into six-month segments. The new extension will break it up into three-month increments.
This far, the forbearance program has prevented many homeowners from being at risk of foreclosure. According to the Mortgage Bankers Association, roughly 5.4% of mortgages across the country are still in forbearance. The peak was last June, when the figure reached above 8%. However, as employment rates continue to improve, more and more people are exiting forbearance and resuming making their monthly mortgage payments. There are about 2.7 million borrowers who are currently in forbearance. About a quarter of them have continued to make their monthly payments.
When people are out of forbearance, they don’t have to pay all the missed payments at once. Instead, they can request to move the amount to the end of their loan’s duration. This way, they can resume making payments at the amount they were paying before the pandemic, without extra costs. However, some loan services also offer the option to make the payments all at once.
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