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Forbearance Guidelines: How to Put Your Payment on Hold During COVID-19

The COVID-19 outbreak is impacting us all. For some, life has changed little, while for others life has changed significantly.

If you are taking leave from your job and currently unable to work, your mortgage can be a heavy financial burden. We understand this problem, and want to do our part to help you through these difficult times.

There are actually details and clauses built into a variety of loans that give you the chance to place your mortgage into forbearance. Utilizing these important details could free your finances and help you make it through the difficulties of the COVID-19 crisis.

If you meet specific requirements, you can place your mortgage into forbearance, lifting a significant burden on your finances while we wait out this global health crisis. 

Easing Your Financial Burdens through Mortgage Forbearance

There are some important details we need to cover to fully understand the forbearance option.

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Forbearance guidelines will change depending on the lender, so be sure to speak with your loan officer or agent.

If the mortgage in forbearance is not owned or serviced by Cross County Mortgage, you will need to be out of forbearance before closing, and you will have to meet specific payment-history requirements. You will also need to deliver documents that outline why the mortgage is being placed into forbearance, and that you do not intend to file forbearance on a new loan if a new loan is being applied for. If a new mortgage is being applied for, it need to meet all other agency requirements, including eligibility, qualification, and documentation.

If you are in forbearance on any mortgage that secures a property other than the subject property, the following rules apply. First, if all payments have been made, in accordance with the original note, the borrower is not required to cancel the forbearance agreement. However, if all payments have not been made, you will not be eligible.

Let’s go into further detail on how forbearance can be applied to your current mortgage…

Note: Rules are always changing. This article is meant for general information only and does not constitute an official offer of forbearance or statement of current rules. For official forbearance rules, you must contact our staff.

Fannie Mae’s Forbearance Rules

If your loan is supported by Fannie Mae, you will have to be current for the month due at the time of the closing. So if the next payment is due on June 1st, the subject loan will need to fund by June 31st. There are also details from Cross Country Mortgage; for example, if you have a mortgage not owned and serviced by CCM and there are any late payments you may be ineligible.

Forbearance Rules for FHA Loans

For FHA loan, a mortgage in forbearance that is more than 30 days past due is considered delinquent and will have to meet standard guidelines. There are also details for the type of FHA loan.

Streamline Refinancing, for example, offers some options for forbearance. It is ineligible if there has been a 30-day-late payment in the last six months, or if there has been two or more 30-days-late payments in the past 7 to 12 months. This includes mortgages in active or completed forbearance.

Limited cash-out refinancing is ineligible under the same conditions that we outlined above, but if the mortgage is a cash-out refinance (not limited), you will be ineligible for forbearance if there have been any 30-days-late payments in the past year on any mortgage that is securing any property.

There is also an option for the standard guidelines and manual downgrade requirements. Purchase and limited cash-out refinancing is available for forbearance, but the mortgage will need to go through some slight adjustments before forbearance can be granted. It will need to be downgraded to a “refer” and then manually underwritten if, in the past year, you have three 30-days-late payments, one 60-days-late payment, or one 90-days-late payment. This goes for any mortgage on any property, so even if it is not the mortgage on which you are seeking forbearance, and it is not a mortgage serviced by our team, it can still restrict your chances of getting a forbearance.

The same general guidelines apply to cash-out refinancing. But in this case, the mortgage has to be downgraded if there are any delinquencies within the past year.

Forbearance Rules for VA Loans

VA mortgages are one of the most important loan options for qualifying veterans and active service members. They are also a wonderful resource for eligible family members. If you have a VA loan and are experiencing financial troubles caused by the coronavirus, you may place your mortgage in forbearance. Your loan should be eligible for forbearance if there are no delinquencies at the time of the forbearance. 

Forbearance Rules for USDA Loans

By supporting loans for homes in rural and suburban areas, the USDA hopes to revitalize and improve these locations. One of the advantages of a USDA loan is that they can be secured with 0% down in certain situations. There are cases where a USDA loan can be eligible for forbearance but it will be ineligible if there have been late payments within the past 12 months. 

How to Request Mortgage Forbearance

Applying for mortgage forbearance, either through our team or another lender, will start by submitting an application. Depending on your lender, there may be an online application that you can complete.

To complete the application, you’ll need a variety of information, including your most recent mortgage statement, an estimate of monthly household expenses, an estimate of current income, and an explanation of your hardship. Documents that verify this hardship will be useful.

You’ll want to start early instead of waiting until you are about to miss a payment. It’s best to request forbearance before a payment is late.

Don’t Wait! Find out if Mortgage Forbearance is Right for You

We are here to help in any way possible. If you feel that forbearance would be the right option for your finances, please contact our staff right way. We understand that many people are suffering from the economic slowdown caused by the coronavirus, and we’ll do whatever we can to help you through these difficult times.

We’ll all get through this together, so contact us today and find out what we can to help!