BEWARE! Mortgage Forbearance Could be a Trap | USTaxAid

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BEWARE! Mortgage Forbearance Could be a Trap

Written by Diane Kennedy, CPA on April 13, 2020

You may have heard that the government has told lenders with government -backed loans like Fannie Mae and Freddie Mac that they have to give real estate owners a little bit of a reprieve. 

That break is called a forbearance. 

Pretty much if you have a single-family home, duplex, tri-plex or 4 family home, you probably have a government backed mortgage. That means you get 3-4 months without having to make your mortgage payment. 

Sounds great, right? 

Not so fast.

This past week, I told members of my Facebook group, Diane Kennedy’s US Tax Group to ask their lender an important question.

What happens at the end of the forbearance period? 

Their replies were shocking! Over half of the banks said that as soon the government-ordered forbearance period was over that the borrower had to immediately pay back all the money. 3 months off? Awesome. Then you have to pay 4 months total in the next month. 

Or it’s foreclosure time. 

A few were willing to work with their borrowers. But pretty much all the big boys said they wanted you to pay up right away or face the coincidences. 

Ask them what happens after the forbearance period. Ask before you do it, or you could face a big problem later. 

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