Not all struggling borrowers who are eligible for forbearance have taken it during the pandemic. That has led to a growing number of homeowners who are delinquent on their mortgages but don’t need to be. About 400,000 homeowners are “needlessly delinquent,” notes Urban Institute researchers Laurie Goodman and Michael Neal in a recent report.
The Coronavirus Aid, Relief, and Economic Security Act has allowed homeowners with federal mortgages to defer their mortgage payments for six months if needed. Borrowers only need to contact their lender to attest that they have a pandemic-related financial hardship.
“These borrowers may not know they are eligible for forbearance or do know but wrongly fear having to make ‘double payments’ when the forbearance period ends,” Goodman and Neal say.
Real estate professionals can help educate at-risk borrowers about mortgage forbearance options. The National Association of REALTORS® offers at realtorparty.realtor a downloadable brochure called “Protect Your Investment” that outlines what homeowners should ask lenders about their options and the payback requirements when considering forbearance.
You can also direct clients to a video, produced by the Consumer Financial Protection Bureau and HUD, that helps homeowners understand and explore their options for forbearance. It’s available through HomeownershipMatters.realtor or at the CFPB website, where they can also find useful links and a checklist on how to avoid foreclosure.
“Roughly 2% of government borrowers are needlessly delinquent across different servicer types, vintage years, and geographies, which suggests that an outreach campaign to reach these borrowers must be broad,” Goodman and Neal write.
As of Sept. 28, the Mortgage Bankers Association said that 6.87% of mortgage borrowers are in forbearance. A quarter of those borrowers are continuing to stay current on their payments even though they are in forbearance, using it more as an insurance policy in case they’re suddenly unable to make a payment.
