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Here’s What Really Happens After a Forbearance

By now you’ve probably heard that homeowners struggling to pay their mortgage due to COVID-19 can apply for temporary relief. The program, outlined in the CARES Act, is called a forbearance and lets homeowners “pause” their mortgage payments for three to 12 months.

After a forbearance, homeowners will need to repay the payments they missed. Depending on a homeowner’s situation and the guidelines defined by the owner of their loan, they may have different solutions available to help with repayment. One solution may be moving some or all of the amount owed to the end of their loan, sometimes called a deferral. Other solutions may include:

Loan Modification: At the end of a forbearance, a servicer may adjust the terms of a homeowner’s mortgage to make up for the amount they owe. Some examples of modifications that may be available for homeowners exiting a Pandemic Forbearance Plan include:

  • Extension of the term of the loan (i.e., tacking on missed payments to the end of your loan).
  • Deferral of the unpaid amounts to the end of the loan, interest free (i.e., a balloon payment).
  • A new interest rate.

Repayment plan: With this solution, a servicer simply tacks on an extra amount to the regular monthly payment until the amount owed is paid back. This usually happens over three to six months but could vary depending on the homeowner’s circumstances.

Reinstatement: If a homeowner is able, paying back the amount they owe all at once is definitely the simplest option. It’s not for everybody, but it’s on the table. This is called a reinstatement. You may have also heard it referred to as “paying a lump sum.”

What to Do Next

If you’re a Mr. Cooper customer and you’ve entered into a forbearance, check your online account 30 days before the end of your plan. Tell us if you are ready to resume your payments and we’ll be able to provide possible solutions. 

Rest assured that we will explore every solution available. The Pandemic Forbearance Plan exists to help homeowners get back on their feet during a tough time. We’ll work with you before, during, and after to help you find the best solutions for your situation.

Are you a Mr. Cooper customer struggling to pay your mortgage due to COVID-19? Click here to see how we can help.