Forbearance is not 🚫 forgiveness.🙏

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


Forbearance is not 🚫 forgiveness.🙏
Connect With Us!

If you're looking to buy or sell a property connect with us today!

How Can We Help You?

We would love to hear from you! Please fill out this form and we will get in touch with you shortly.
    (check all that apply)
  • This field is for validation purposes and should be left unchanged.

Leave a Reply

Your email address will not be published. Required fields are marked *