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Tools for Addressing COVID-19 Mortgage Forbearance Balances

Addressing COVID-19 Mortgage Forbearance Balances in Denver, CO

If you were in forbearance on your mortgage payments because of COVID-19, the time is quickly approaching for you to resume making payments and come up with a plan to get caught up on missed payments. This probably sounds overwhelming, but fortunately, there are a number of options for bringing your mortgage current and keeping your home. Don’t hire an out-of-state “law firm” to modify your loan – there are a number of free options you can take advantage of by contacting your loan servicer directly.

The tools available to you depend on the type of mortgage loan you have, so please find the correct option below. You can almost certainly come up with a plan if your loan type doesn’t appear on the following list, there just aren’t the same type of formal standards.

In the event that your loan doesn’t offer a plan or you’re not approved, a Chapter 13 Bankruptcy will stop a foreclosure and give you 5 years to get caught up on your mortgage arrears while potentially wiping out other debt like credit cards and medical bills.  Get in touch with one of our reliable Denver bankruptcy attorneys at the Law Office of Clark Daniel Gray for helpful legal advice. 

Fannie Mae

You can find out whether you have a Fannie Mae loan by using the search function here.

There is no lump sum required at the end of forbearance per the Federal Housing Finance Agency (FHFA). For borrowers who can afford their pre-crisis payment, are unable to reinstate or afford a repayment plan, and were less than two months delinquent as of March 1, 2020, you can choose to avail of: 

  • Payment Deferral – You can defer payments up to up to 18 months

For borrowers who cannot afford their pre-crisis payments or were two months delinquent or more as of March 1, 2020, you can go for: 

  • Flex Modification – You may avail of reduced interest rates if you have hardships due to the Covid-19 pandemic and existing home equity. 

Freddie Mac

You can find out whether you have a Fannie Mae loan by using the search function here.

No lump sum is required at the end of forbearance per FHFA. For borrowers who can afford their pre-crisis payments, are unable to reinstate or afford a repayment plan, and were less than two months delinquent as of March 1, 2020, you can go for: 

    • Payment Deferral – Payments can be deferred up to 18 months of payments.

For borrowers who cannot afford their pre-crisis payment or were two months delinquent or more as of March 1, 2020, you can avail of: 

    • Flex Modification – Reduced interest rates are available for borrowers with COVID hardships and home equity.

FHA-insured

To find out whether you have a Federal Housing Administration (FHA)-insured loan, you’ll need to review your mortgage statement, HUD-1, other loan documentation, FHA Case Number, or call the servicer

FHA does not require a lump sum at the end of forbearance. Your servicer may send you loan modification paperwork without waiting for you to request it.

For owner-occupant borrowers requesting assistance, FHA’s  COVID-19 post-forbearance options include

  • COVID-19 Standalone Partial Claim – “a zero-interest subordinate lien” (like a second mortgage)
  • COVID-19 Recovery Modification – “a 360-month loan modification, which must include a Partial Claim, if available”

There are also non-retention options (surrendering the home) and options for nonoccupants.

VA-guaranteed

You’re probably already aware whether or not your loan is VA-guaranteed, but if not you can refer to language on the promissory note, mortgage, and HUD-1.

It is explicitly stated that servicers cannot require a lump sum immediately after forbearance. VA has developed its preferred order of post-forbearance options for servicers to consider depending on whether the borrower can afford to pay the pre-hardship mortgage payment.

For borrowers who can afford their pre-hardship payment, the following options are available: 

  • Stand-alone VA Partial Claim Payment (COVID-VAPCP)
  • Payment plan
  • Disaster Extend Modification

For borrowers who cannot afford their pre-hardship payment, you can avail of the following: 

  • COVID-19 Refund Modification
  • Any other authorized VA modification

USDA-guaranteed

It can be difficult to know whether you have a USDA-guaranteed loan, but you’ll want to start by reviewing the  HUD-1, closing documents that may indicate guarantee, including potential guarantee attached to the promissory note.

RHS does not require a lump sum at the end of forbearance.

Servicers should first consider borrowers facing COVID-19 hardships for standard USDA-guaranteed workout options and for natural disaster workout options.

If more relief is needed, servicers should evaluate borrowers for the COVID-19 Special Relief Measures

USDA Direct

Your lender is the United States and you communicate with the Centralized Servicing Center.

No COVID-19 specific post-forbearance provisions are listed.

The USDA has developed a refinance program that borrowers behind on their mortgage may access. Otherwise, USDA guidance directs borrowers to payment assistance and moratorium provisions that are outlined in Handbook HB-2-3550. 

Let a bankruptcy lawyer in Denver, Colorado Help You!

Keeping track of mortgage loans in the time of a pandemic can be stressful.  Missing out on important due dates can be daunting especially if one is financially challenged.  Keeping track of other debts and expenses like utility bills, credit card balances, medical expenses can add to the worry of the possibility of losing your property. Don’t fret. There are options available to you to prevent foreclosure.  Consult a helpful bankruptcy attorney in Denver, Colorado.  The Law Office of Dray Legal is here to help you get back on your feet to a bright financial fresh start.

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