Forbearance does not 🚫 mean forgiveness 🙏. It’s important❗ to understand what it is that you are signing 📝.
HI This is Carlitos Zapata with PITBULL REALTY
Let’s do some ‘mortgage forbearance math’. Cindy and John have a mortgage. It’s currently at $2,500 💰per month 📆. John loses his job and gets laid off from work 😖. John hears 👂all of the “News” about forbearance and how if you’ve been negatively 👎 impacted by COVID-19 that banks 🏦 have to work with you.”
Excited 😁John calls the Mortgage Servicer 📞, and inquires about the Forbearance he is entitled to. He’s so excited because in just one phone call 📞, for now, he doesn’t 🚫 have to pay his mortgage for six months 📅. This is where the craziness 😨 comes in.
Now Seven months later, John is back to work 💼, and of course he wasn’t able to save any additional money 💰 when he was out of work during the forbearance period. The Forbearance timeframe ⌛ of six months is now up and the Servicer sends John and Cindy their bill 💸. Cindy nearly falls over and dies 😱 because the bill shows that now Cindy and John owe $15,000 + $2,500 💰, and it’s all due right now ⬇ on the seventh month 📅.
So $17,500 Seventeen thousand five hundred dollars 💵 in total are all due now, THIS MONTH 😫) Right John is shocked and calls 📞 the Servicer and asks, “WHY??” ❔ Servicer: “That’s the 6 months 📆 of forbearance ($2,500 x 6) plus ➕ the current month of $2,500” Totaling $17,500 😨 Seventeen thousand five hundred dollars 💰 in total are all due now.
John: “Well obviously, I haven’t been working 💼 and I don’t have that kind of money💰 . I can’t pay that, Is there anything I can do , can we renegotiate 🤷♂️?”
Servicer: “Sure, we will spread out the $15,000 💸 over 12 months 📅.” John: “Great….thanks so much 👍. “How does that work?” Servicer: That will be $3,750 (three thousand seven hundred fifty dollars a month for the next 12 months 📅.”
JOHN: ” What!!! 😱I don’t understand, WHY 🤷♂️? Servicer: “$15,000 Fifteen thousand divided ➗ by 12 months = $1,250 💰 One thousand two hundred fifty dollars, . $1,250 💵 One thousand two hundred fifty dollars, 12 month payment plan 💲) + $2,500 twenty five hundred dollars 💰(typically due) = $3,750 Three thousand seven hundred fifty dollars (for 12 months)”
John: “I can’t afford that❗️.” Servicer: “Sorry…” John: “Can I refinance?” 🤷♂️ Servicer: “No because the loan 💰 went into forbearance (& you have an ‘unsatisfactory 👎 recent mortgage payment history’ in the eyes 👀 of Fannie Mae & Freddie Mac’s current underwriting approval guidelines”) John: “What can I do?” 🥺
To sum all of this up. Forbearance is not 🚫 forgiveness. You still have to pay 💰 it back. Whether it is at the end of a few months 📅, or if it’s at the end of the lifetime of the loan 💵, it will have to be paid back 📥. We need to make sure 👍 that we are correctly ✅ giving out information regarding Forbearance.
I’ve recently heard an attorney 🕴 telling sellers that they should just do forbearance, and they will not have to pay 💲 it back and there will be no 🚫consequences. Please make sure you understand 🤔 what you’re getting into. It’s very similar to that of 2008 when people were short ⬇️ selling and didn’t realize 🤷♂️ before they passed the Mortgage Forgiveness debt relief act 📄, that if you sold your property 🏠 you would be taxed the difference ➖ of what you owed on the home and what you short sold 💵 your home for.
Just remember, there isn’t 🙅 such a thing as “Free” 🆓 as of right now when it comes to Forbearance. The Mortgage Servicers cannot sustain this prolonged period ⌛️ of “fronting the money you don’t pay 💰 them during the forbearance period” and will need ❗️ to seek restitution somehow.
Unlike the Mortgage Crisis in 2008, most people have a substantial amount of equity in their home 🏠. At some point the money 💲 owed will become due ☑. Mortgage Interest Rates will likely be low 📉 for the majority of 2020…don’t allow media 📱 headlines, or bad information to cloud your judgement 💬 and take you down the wrong path 👎 and disqualify you to have the ability to refinance…or worse…cause you to lose your home 😱.
Think back to the last housing crisis and remember how dangerous ☠ it is to take advice 👎 from people who are not qualified ☑️to provide it, including the media 💻, google or social media 📱. They aren’t 🚫 going to come and bail you out ❌ or lend you the money 💰 you’ll need when you need it.
Know 🤔 what you’re getting yourself into before you sign 📝. Speak with the correct ✅ people, ask the right questions , read the fine print 🔎.
While forbearance might be the only option for some 🤷♂️, it should not be pursued unless absolutely necessary 😣. Other options may be offered 📂by the Mortgage Servicer (such as deferring the entire amount due to the “back of the loan”), but assumptions should NOT ❌be made without written clarification 📄.
Bottom line, know what you are agreeing to ✅ and work with a VERY experienced 🤝 Realtor and Lender partners 👥 who know how to protect you 👉 and give you accurate ☑️ sound advice.
Please feel free👍 to reach out to my team and I for any advice at all 😁, let us help you navigate 🔎 these tough times or guide you to the right direction. ✅
This is Carlitos Zapata with PITBULL REALTY
REAL ESTATE WITH LOYALTY AND LOVE 💓