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

REAL ESTATE WITH LOYALTY AND LOVE 💓

Forbearance is not 🚫 forgiveness.🙏
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