Facts You Should Know About Mortgage Forbearance Post Irma

If your area was impacted by Hurricane Irma, you may have heard about a special ‘disaster relief’ option some mortgage companies are offering. Specifically, mortgage companies are offering some homeowners a chance to choose forbearance for three months (resulting in a grace period of three months without making mortgage payments).

While this offer sounds like a much-needed break in the wake of a disaster, there are some important facts about disaster relief forbearance payments that you should understand and be aware of before signing an agreement with your mortgage company.

The Meaning of the Word ‘Forbearance’

In financial terms, the word ‘forbearance’ literally means ‘holding back.’ In the case of missing mortgage payments, forbearance means refraining from making payments for a certain period of time (in this case, three months) before making those payments -- this is the important part. You are still required to make those missed payments even though they can be made at a later time. Forbearance should not be confused with forgiveness. 

The Social Media Ads

A number of clients are coming to me with social media ads placed by mortgage companies. These ads are noting the aforementioned three month forbearance period, but the ads may or may not mention the repayment requirement.

Regardless of what the social media ads look like, anyone that chooses to sign up for this option is immediately sent paperwork that includes details of the repayment process -- some of our clients have come to us to gain help and understanding of the terms notes in those documents and this is a good idea if those details are unclear.

Press Release Information

According to one press release issued by Fannie Mae, the terms for the Irma relief forbearance program are as follows: 

  • Clients that opt for disaster forbearance will not incur late fees.
  • No delinquencies will be reported to credit bureaus following this agreement.
  • Will not be forced to catch up on all payments at once.
  • Can work with their servicer to resume making a mortgage payment that is similar to what was being paid before the disaster. Or, if homeowners need additional assistance, they can work with their servicer on options to keep their home.
Note that this press release is solely related to disaster forbearance related to agreements made with Fannie Mae. Fannie Mae’s terms may not be the same as those terms set forth by other mortgage companies.

The Important Thing to Note

Pushing back payments for 90 days in the wake of a disaster may seem like a godsend - and it can be. However, be prepared to repay those missed payments at a later time (when this time depends on the terms set forth by the company that you are working with). In every single case, it is absolutely crucial that you read, know, and understand the terms of the agreement.

If you do not understand the agreement, please book an appointment with our legal team and we will go over the terms with you. Never sign anything that you do not fully understand - you could be on the hook for something that you cannot adhere to.