The Foreclosure-Related Eviction Moratorium Is Ending: Now What?
When the announcements came during the spring of 2020 about stay-at-home orders, stimulus checks, and eviction moratoriums, no one expected that the pandemic would still be the deciding factor in the way we do most things, even a year and a half later. At the beginning of the pandemic, the federal government issued a moratorium on mortgage foreclosures and foreclosure-related eviction moratoriums. The government extended both of these beyond their original end dates, but the moratorium on foreclosures ended on July 31, 2021, and the moratorium on foreclosure-related evictions will end on September 30. Meanwhile, many mortgage borrowers are still mired in the same financial hardships that have plagued them during the pandemic. A Boca Raton foreclosure defense lawyer can help you decide what to do next, now that the pandemic-related protections for struggling mortgage borrowers are ending.
What’s Next After the Forbearance Payments Come Due?
September 30 is the deadline to enroll in mortgage forbearance programs if you have a federally backed mortgage, and because of the pandemic, the lender is required to accept all applications, except if there is an egregious reason not to accept the application. Private mortgage lenders are not required to follow this rule, but many of them do, because it is the least bad option.
A mortgage forbearance is a pause on monthly payments for up to a year. When the forbearance period ends, the deferred payments come due, either in a lump sum or in installments. These are the options you have when the forbearance period ends:
- Reinstatement – At the end of the forbearance period, you pay a lump sum equal to the total of all your missed payments. This option is not feasible unless, when you enrolled in the forbearance, you were expecting to receive a lump sum in the near future, such as if you were in the process of selling a valuable asset or were about to receive a settlement from a personal injury lawsuit.
- Payment Plan – After the forbearance period ends, your monthly payments will be higher until you repay the deferred amount. For example, if your mortgage payment was $1,000 per month, and you got a forbearance of one year, you will still owe the $12,000 at the end of the forbearance. When the forbearance ends, your payments will be $1,500 per month for two years and then revert to $1,000 per month.
- Deferral – After the forbearance period ends, you will go back to monthly payments; in other words, if you paid $1,000 per month before the forbearance, you will pay $1,000 per month after. You will repay the deferred amount at the end of the term of the mortgage; if it is a 30-year mortgage, you will continue to make payments for a 31st
- Loan Modification – You reach an agreement to change the terms of the loan so that your monthly payments will be lower, for example, extending the term of the mortgage from 20 years to 30 or from 30 years to 35.
For borrowers who are still struggling as the pandemic drags on, loan modification is the most appealing option. The best thing you can do is talk to your lender about loan modification options. You should also contact a consumer law attorney about your overall debt repayment strategy.
Let Us Help You Today
A mortgage foreclosure defense attorney can help you if you are in a desperate situation with your mortgage debt. Contact Nowack & Olson, PLLC for help with your case.