Can’t Make Your Mortgage Payment?

One major result of the Coronavirus or COVID-19 pandemic is that countless homeowners are finding themselves unable to make their mortgage payments. Some 6.6 million people filed for unemployment in the week ending April 4th. So, what do you do if you can’t make your mortgage payment?

Google “I can’t pay my mortgage” and you’ll find delay or forbearance is the most discussed option on Bankrate.com. It is also one of the three options shown on the Fannie Mae website. However helpful these websites are, they don’t necessarily tell the whole story. I recently sat in on a webinar that discussed the realities of forbearance.  

Under forbearance, your payments are delayed for a set period, say six months – they are not forgiven. At the end of that time, your mortgage holder is not only expecting you to make your regular payment, but also pay those missing six payments! Although late fees are supposed to be waived, imagine the shock of being expected to make seven mortgage payments all at once. Your only option is asking for a payment arrangement on those missing payments and getting the lender to spread them out over a reasonable time period. However, remember that your regular mortgage payment is due each month while you’re trying to catch up.

The other option is to ask for a loan modification. Under this option, you reach an agreement with the lender to change the original terms of your loan, often adding the missed payments to the end of the loan, thereby extending your loan period. The pitfall of loan modifications is that your interest rate may increase, depending on the interest rate at the time of modification. However, despite that, you stay in the house.

The last thing is dealing with the property tax and insurance, normally a part of the monthly payment. I called our mortgage company, M&T Bank. They had a moratorium on making mortgage payments but not a forbearance. The representative stated that the homeowner’s insurance and property tax are “covered” by them, meaning you’ll have to catch those payments up, also.

The bottom line is that, although none of us had any control over the response to this pandemic, lenders are only willing to cut you a little slack. The best you can hope for is you’re back to work quickly and your lender is willing to work out an arrangement that doesn’t financially burden you.

I’m not an attorney, a mortgage professional or a banker. I’m Realtor® and an investor, concerned about what is happening to those financially damaged by the COVID-19. Call your lender if you are having trouble making your payments. Trust in the Lord.