Please Pay Your Mortgage!

Where does the path lead?

I have been hearing the word Forbearance a lot lately. It’s got me worried. News reports throw the term out casually and tell you to call your lender. Here’s the thing: forbearance doesn’ t mean what they imply it means.

Here’s a link to an article from the Consumer Finance Protection Bureau on forbearance: What is mortgage forbearance?

And here’s a quote that summarizes why I am so worried about all of us.

What to consider:

  • You may owe a big bill that comes due all at once.  For example, if your servicer allowed you not to pay your mortgage for six months, at the end of the forbearance period, you may owe all six of your missed mortgage payments in one month.  
  • Interest on the paused amounts will continue to accrue until you repay them.

Keep this in mind:

  • To get mortgage forbearance, you must talk to your loan servicer. It doesn’t happen automatically.
  • The person on the other end of the phone might not understand it much better than you do. I worked as a Realtor® during the housing crisis and I am here to tell you that the employee on the other end of the phone is probably not a CPA or an attorney or a mortgage professional. When I worked at a bank, I would not have taken vital financial advice from Receptionist Alice.
  • Florida is a homestead state. Not all states are. That means more than just getting a break on your taxes. Your primary residence is protected from most creditors. So, as long as you pay your mortgage, your taxes, your HOA and some protected construction people, it is unlikely that anyone can take your home.
  • There are other, less vital expenses that you might be able to go without during this time.

The bottom line: don’t assume that forbearance is easy, automatic, or going to solve more problems than it creates. Every mortgage servicer is different. Be sure you know exactly what you’re getting into and ask for a second opinion if you feel uneasy about anything. There’s still time to pay April’s mortgage.