How Long Can Forbearance Plans Help Homeowners Who Can’t Afford Mortgage Payments?


We’ve turned the page on COVID-19 to a much brighter chapter in 2021. In virtually every sector across the United States, consumers and businesses are returning, breathing life into an economy stymied by the pandemic. Economic relief and stimulus programs are winding down, and mortgage forbearance programs that provided relief to homeowners during the pandemic received its final extension through July 31st, 2021. In fact, newly initiated forbearance plan dropped from the height of mortgage relief in 2020 by 40% to 2.3 million plans in March 2021. Percentages, however, do not paint a complete picture of recovery, especially from the perspective of one of those 2.3 million homeowners not yet feeling the benefits of a recovering economy.

What is a Mortgage Forbearance?

A forbearance plan occurs when your lender or bankgrants a homeowner the option to either pay a lower amount on their monthly mortgage payment or pause payments for an agreed-upon time frame. At the end of this period, you will have to pay back the amount that was deferred during the term of the forbearance plan. In virtually all cases, the deferred amount results either a higher mortgage payment or a single one-time payment that many homeowners still may not be able to afford.

What Options do I have for Making Forbearance Payments?

It depends on the lender and the plan offered, but here are a few options.

  • Reinstatement – pay the total deferred amount all at once.
  • Repayment Plan– at the end of the forbearance period, temporarily increase your monthly payments for up to 12 months until the balance of the deferred payments is paid.
  • Forbearance Balance Accrual – the total deferred amount is added as an additional amount owed to your existing loan amount and is due at the maturity of the loan payable when the property is sold or transferred, refinanced, or paid off in full.

Many homeowners that don’t have Balance Accrual as an option may find that the obligations of reinstatement and repayment at the end of the forbearance period causes the same, if not more, hardship. In many cases, these homeowners are battling economic trouble on numerous fronts. Car payments, credit card debt, and basic living expenses when combined with an increased mortgage payment places an incredible burden on a household that find themselves on the outside looking in on a recovering economy.

What are My Options if I Can’t Make Forbearance Payments?

A short sale may be a possible alternative if you owe more than you can afford, and post-pandemic relief programs still can’t help. What is a short sale? A short sale occurs when yousell your property to a third party for less than the amount due on the mortgage. Your lender agrees to accept the lower amount, and you’re released from the mortgage debt. It’s a viable option to avoid foreclosure, poor credit, and provide you piece of mind to get a fresh start in our new normal.

Our specialists at Apex Resolution can advise you on these options to address the strain of higher mortgage payments associated with forbearance plans and partner with you in starting the short sale process. We’re here to help.