Making ends meet right now is a challenge for many Americans – which has them turning to mortgage forbearance. However, consumer advocates say the process needs to be handled better.
Consumer Reports sent a letter to the top mortgage providers last week, urging them to clarify that a balloon payment at the end of the forbearance period is not the only option.
“The thought of having to pay a lump sum at the end of the forbearance period was creating an intense amount of anxiety and what we would like is that borrowers are told at the beginning of the forbearance period that there are a range of options,” said Christina Tetreault, manager of financial policy at Consumer Reports.
Depending on your loan and circumstances, you could get a forbearance extension. The missed payments could be tacked onto the end of the loan or paid back over a period of time.
Loan modifications are another option.
The forbearance confusion and concern has been such an issue that the Federal Housing Finance Agency and Fannie Mae came out and said borrowers with federally backed mortgages are not required to pay everything back at once when forbearance ends.
Consumer Reports says this is also the case in many private lender policies.
“They usually say something to the effect of, ‘we will contact you at the end of your forbearance period,’ and based on the loan type that you had and your financial circumstances, we will figure out a way forward together,’” said Tetreault.
Consumer Reports even suggested automatically enrolling people into forbearance after a certain amount of missed payments would be helpful because of the volume of those in need.
For now, it’s up to the borrower to ask for help and follow up about extensions and ask for options.