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Homeowners don’t have to repay the forbearance amount all at once upon completion of their forbearance plan: Get the facts

Get the facts: homeowners don’t have to repay forbearance amount all at once

Mortgage servicers have been overwhelmed with calls about forbearance plans lately. And, as the industry adapts, we’ve been hearing a few rumors.

Specifically, we’ve heard that many homeowners who may be interested in and eligible for a forbearance plan are holding off because they’re worried about reinstatement – that is they think their only option is to repay the entire forbearance amount all at once at the end of the forbearance plan.

This is simply not true.

Reinstatement is the first option the servicer must consider for homeowners to resolve the missed amount, but it’s not the only one.

Homeowners who receive a forbearance plan are not required to pay back the amount they owe all at once unless they are able to so. Each homeowner is facing a unique financial situation, and there are a variety of options to resolve the missed amount.

Options that may be available to resolve the missed amount

Walk them through their options using Fannie Mae’s post forbearance script (and you can find more complete information in our Servicing Guide), but here’s a quick overview:

Option 1: Reinstatement

Homeowners who are in a position to reinstate their mortgage by paying the full forbearance amount all at once at the end of the forbearance period may do so. However, that’s one of several options, not the only option.

Option 2: Repayment Plan

At the end of forbearance, if homeowners have sufficient income to temporarily pay more than their pre-forbearance mortgage payment, you can set them up in a repayment plan. A portion of the forbearance amount will be paid each month (for up to 12 months) in addition to the homeowner’s regular monthly payment amount.

Option 3: Payment deferral

A payment deferral adds (defers) missed payments (principal and interest) to the end of the mortgage loan term as a non-interest-bearing balance. The balance is due at the maturity date or earlier upon the sale or transfer of the property, refinance of the mortgage loan, or payoff of the interest-bearing balance of the loan.

Option 4: Loan Modification

Homeowners who come to the end of their forbearance period and can no longer afford their pre-forbearance monthly payments may be eligible for a loan modification, which will permanently change the terms of the loan in order to makes their monthly payments more affordable.