Biden Wants to Give Homeowners Till Sept. 30 to Request Mortgage Forbearance

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Mortgage borrowers could get more time to hit pause on their home loans.

Millions of Americans have lost their jobs or otherwise seen their incomes decline in the course of the coronavirus pandemic. Thankfully, many got a big reprieve in the form of mortgage forbearance.

Normally, forbearance -- pausing loan payments for a time -- is something mortgage lenders can deny loan customers. But during the pandemic, homeowners who need it have been guaranteed that protection. Specifically, borrowers are entitled to request a 180-day period of forbearance followed by a 180-day extension, for a total of 360 days without making any payments. During that time, borrowers cannot be reported as delinquent on their home loans to the credit bureaus.

The Federal Housing Finance Agency (FHFA) has yet to set an end date for its coronavirus-related forbearance policy. But President Joe Biden is pushing to extend the timeline to request forbearance to Sept. 30 (in conjunction with other relief measures). Given that the greater economic crisis is by no means over, that would give borrowers who encounter financial difficulties in the next few months the flexibility to hit pause on their home loans rather than struggle to pay them. And it could, in turn, save a lot of mortgages from going into foreclosure.

What you need to know about mortgage forbearance

If you're carrying a mortgage and are having a hard time making ends meet during the pandemic, you might consider asking your lender to put your home loan into forbearance. You should also know:

• You'll need to catch up on your payments eventually. Missed mortgage payments during forbearance aren't forgiven, just deferred to a later date.
• Your lender can't force you to catch up in a single lump sum. Rather, you're given a timeline to follow, the specifics of which depend on your lender.
• You can still pay your mortgage, or make partial payments, while your loan is paused. If, for example, your usual monthly payment is $1,200 but you can only swing $600 because your hours have been cut at work, that's fine. The more you put into your loan during forbearance, the less you have to catch up on later.
• You can qualify for forbearance even if you're not unemployed. You may be grappling with other new expenses like increased childcare costs during the pandemic, so even if you still collect a paycheck, you can hit pause on your loan. In fact, your lender can't even require you to provide proof of hardship during the pandemic.
• You have options if you can't pay your loan after forbearance. If your financial circumstances aren't better after those 360 days of forbearance, you can talk things through with your lender. You may be eligible to modify the terms of your mortgage so your payments are lowered.

Many homeowners have needed help during the pandemic, so if you're struggling with your mortgage payments, pausing them temporarily could take some pressure off. Of course, you could also see if you qualify to refinance your mortgage -- if you can lower your loan's interest rate enough, your monthly payments could shrink substantially. But if that's not an option, forbearance may be your next best bet.