{"id":1813,"date":"2021-11-10T10:00:00","date_gmt":"2021-11-10T15:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1813"},"modified":"2024-04-25T23:19:23","modified_gmt":"2024-04-26T03:19:23","slug":"billions-in-delayed-mortgage-payments-is-this-sustainable","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/billions-in-delayed-mortgage-payments-is-this-sustainable\/","title":{"rendered":"Billions in Delayed Mortgage Payments: Is This Sustainable?"},"content":{"rendered":"\n

Life After Forbearance<\/em><\/strong><\/p>\n\n\n\n

\"A<\/figure><\/div>\n\n\n\n

Let\u2019s begin with the financial facts. As the festive season approaches, about a half a million more U.S. homeowners are coming out of their 18-month, pandemic-related mortgage forbearance periods.<\/p>\n\n\n\n

All told, about 15% of U.S. mortgage holders opted to put their payments on hold. Most are already out of their forbearance plans, but that doesn\u2019t mean they\u2019re out of the woods yet. Many exited forbearance without having made their past-due payments. They owe, on average, just over $14 thousand<\/em> per homeowner. The Brookings Institution counts the current U.S. mortgage forbearance overhang in the tens of billions<\/a> of dollars.<\/p>\n\n\n\n\n\n\n\n

Can the Lending Industry Meet the Challenge?<\/strong><\/h2>\n\n\n\n

Under the stimulus bill called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), mortgage holders, upon their own request, got access to a 180-day forbearance plan. Now that the time has wound down, mortgage services continue to work with borrowers. Options include deferring the past-due bills until the end of the mortgages, or modifying loans and reducing mortgage payments.<\/p>\n\n\n\n

Updates For Borrowers Backed by Freddie Mac and Fannie Mae<\/h3>\n\n\n\n

Unless the market crashes, Freddie Mac and Fannie Mae are \u201cwell-positioned to bear\u201d forbearance losses and can \u201ccontinue performing their role of providing liquidity, stability, and affordability to the mortgage market,\u201d according to the Federal Housing Finance Agency Office of Inspector General (November 3, 2021; see PDF<\/a>). This message is reassuring news for mortgage companies and clients dealing with conventional loans.<\/p>\n\n\n\n

Conventional lenders can\u2019t insist on a balloon payment to recover all the outstanding debt at once. They have to assist borrowers coming out of forbearance arrive at a workable repayment plan.<\/p>\n\n\n\n

Borrowers should review the terms of Freddie Mac\u2019s and Fannie Mae\u2019s Flex Modification<\/a>, or the Freddie Mac Enhanced Relief RefinanceSM<\/sup> Plan<\/a>. They can also review current options for leaving forbearance as explained at the Consumer Financial Protection Bureau<\/a> website, and call their own mortgage servicers to discuss the best way forward. <\/p>\n\n\n\n

Updates on Government-Backed Loans<\/h3>\n\n\n\n

Homeowners with government-backed loans can face particularly stressful situations. As FHA and other government-backed loans have lower minimum credit scores and down payments, they can be helpful tools for first-time buyers, gig workers and the self-employed, and minority home buyers. These buyers have a heightened vulnerability to serious economic downturns.<\/p>\n\n\n\n

They do have new forbearance options<\/a> if they\u2019ve recently been impacted by the virus or its newer variants. This is in addition to previous options (some no longer open) that enabled borrowers to:<\/p>\n\n\n\n