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In June, the Biden Administration had extended the CARES Act foreclosure moratorium until the end of July. It had also widened the window for homeowners to qualify for forbearance enrollment until the end of September 2021, including an extra three months for qualifying borrowers.
Currently, these steps affect mortgages backed by three federal agencies:
Home loans backed by Fannie Mae and Freddie Mac were provided similar relief measures by the Federal Housing Finance Agency (FHFA), as well. With over 7 million households have taken advantage of extended forbearance options, many South Florida borrowers are now wondering what happens once their terms start expiring.
For homeowners who have federally backed mortgages through the previously mentioned agencies, the White House just announced continued measures to help them avoid foreclosure. Depending on the type of loan you have and your current financial situation, specific lenders will be encouraged or required to provide additional payment reduction opportunities to you.
For example, HUD will assist loan providers in providing qualifying borrowers with a 25% P&I reduction. The Biden Administration believes this will help families struggling to make their house payments avoid foreclosure.
Homeowners who can resume mortgage payments at their original amount could have a subordinate lien option (partial claim). As a result, they would pay zero interest to be repaid when the mortgage or insurance terminates. Typically, this would occur when your home has been sold or refinanced.
There is a COVID-19 Recovery Modification available for those who can’t resume their current mortgage obligations. This modification would further extend their mortgage term for an additional 360 months at the current market rate. In addition, this approach is designed to reduce their monthly P&I payment by 25%.
Ideally, when your forbearance ends, you could work with your lender to repay the back payments owed through one of the following ways:
Pay an increased monthly mortgage amount designed to repay the missing payments for a determined period.
Your loan provider may be willing to allow you to repay the missed payments in a lump sum at the end of your mortgage term so long as you resume your normal monthly obligations. This usually doesn’t incur additional interest, and you could potentially refinance later to include that balance.
Essentially, this method would act as a back-end payment, except instead of a lump sum, you would have an additional monthly amount added to your loan.
You could ask your lender to create a new loan with a longer-term so that payments will be permanently reduced. Keep in mind that the interest would increase over the term of your loan, as well.
If none of these options is a viable solution when your forbearance ends, contact a skilled Ft. Lauderdale foreclosure defense attorney right away. In addition, there are other avenues you might qualify for, including selling your home before it’s foreclosed on.
In Florida, there’s no guarantee you will be able to sell your home for the value of your loan. However, if you face this type of financial shortfall, your lender may let you give them a deed in lieu of foreclosure instead of selling it. Essentially, you are asking to return the home to the bank to avoid foreclosure or owing to any further debt.
Sometimes a lender will let you short sell your home, meaning it’s sold for less than what’s owed, but they will still consider the debt satisfied. Neither of these options has to be accepted by your mortgage provider, so make sure to speak with a knowledgeable attorney first.
If you aren’t sure how you can satisfy the amount owed after a lengthy forbearance period, the idea of potentially losing your South Florida home probably has you losing sleep at night. Find out what your rights are and how you can prevent foreclosure by consulting with a reputable foreclosure defense lawyer as soon as possible.
Rely on Attorney Marc Brown to provide you with over a decade of experience in foreclosure defense. His years representing South Florida lenders make him the best choice when seeking aggressive legal representation to protect your home. To schedule a no-cost legal consultation regarding foreclosures and deficiency judgments, contact the law offices of Marc Brown today.
