After Mortgage Forbearance, What Are Homeowners' Options?
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What is the main topic discussed in this episode?
Here's your money briefing for Wednesday, August 12th. I'm J.R. Whalen for The Wall Street Journal.
What mortgage relief measure helped homeowners skip payments this spring?
For many Americans, stimulus checks and unemployment benefits just aren't enough to cover the cost of their mortgage. So a measure in last spring's coronavirus relief package that allowed homeowners to skip payments for three months was a lifeline. But that three months is up.
Who is Julia Carpenter and what will she explain about forbearance options?
When they first asked about forbearance, they were waiting to see if their job had been cut or if they were going to be experiencing financial hardship.
Our personal finance reporter, Julia Carpenter, will be here in a moment. She'll explain the options that homeowners have when they work to regain their financial footing. That's after the break.
Mortgage payments are many Americans' biggest monthly obligation. The coronavirus relief package passed by Congress in April allowed homeowners to delay those payments, but only for so long. So what are your options once the forbearance period has run out? Our personal finance reporter, Julia Carpenter, has been speaking to mortgage and banking officials, and she's here to discuss. Now, Julia, the ability to take a break from making mortgage payments goes back to the spring when millions of Americans were losing their jobs. What are the banks hearing from homeowners now?
Well, the CARES Act provided for up to 12 months of forbearance. So people who took advantage of this in the spring are now experiencing their three-month check-in, some even their six-month check-in with their servicers.
How are servicers handling check‑ins and extensions after initial forbearance?
And what I heard from lenders is that people are opting either to extend forbearance or they're looking to reinstate or they're looking to take advantage of some of these other relief and assistance programs.
Well, for homeowners, that's really good news.
Definitely. I think a lot of people are still out of work. A lot of people have seen reduced hours, reduced income. They're not able to make their payment as they were prior to the pandemic.
So now is everyone who signed up for forbearance eligible to renew it?
Most likely. When I spoke with servicers, they said that people who are looking to extend forbearance are likely going to be subject to the same kinds of questions they had when they first asked their lender about forbearance. So questions about what kind of financial hardship they've experienced as a result of the coronavirus pandemic or questions about why they wouldn't be able to make their payment as usual.
So what's been the trend that banks are seeing among people who took advantage of forbearance and what they've decided to do going forward?
Who can renew forbearance and what information will lenders ask for?
So the folks I talked to said that while they've seen the volume of requests for forbearance decline consistently since the spring, they're seeing many more requests for people who were in forbearance to extend that forbearance.
Can people make partial payments during the forbearance period?
The people that I spoke to, they said they were actually surprised at how many people continued making their full mortgage payments after declaring forbearance or asking about forbearance, but you're not able to make partial payments. You are able, once you've come out of forbearance, and they call that reinstating, once you've come out of forbearance, you are able to ask about payment plans where you can pay a bit of the money that you missed while you were in forbearance over time. But unfortunately, while you're in forbearance, you can't be paying only portions of your payment.
So why would people make payments once they've entered the forbearance period?
I think for a lot of people, it was kind of a backup plan or a sense of relief. Maybe when they first asked about forbearance, they were waiting to see if their job had been cut or if they were going to be experiencing financial hardship. But then once they had the option of forbearance, they realized that they would be able to rejigger their budget or otherwise make their payment as usual. I think what a lot of people are looking for is some way to reclaim a sense of normalcy.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
What mortgage relief measure helped homeowners skip payments this spring?
0:10–0:26
3
Who is Julia Carpenter and what will she explain about forbearance options?
0:26–1:35
4
How are servicers handling check‑ins and extensions after initial forbearance?
1:35–2:30
5
Who can renew forbearance and what information will lenders ask for?
2:30–3:56
6
Can homeowners make partial payments during forbearance or use repayment plans?
3:56–5:36
7
What are alternatives to lump‑sum repayment like deferral, repayment plans, or modification?
5:36–6:38
8
When should homeowners consider refinancing or mortgage modification given current conditions?
6:38–7:09
Speakers
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