I can't pay my mortgage. What can I do about it? Here's Step 3 of 4
So you have found out who owns your mortgage and you have contacted your mortgage servicer. Let's go on to Step 3 for those dealing with a Covid-19 hardship.
STEP 3 - Follow up and review your initial forbearance documents
Most servicers are processing the initial requests for help without the need to provide substantial supporting documentation. They take the initial information regarding your hardship and then prepare a document outlining the terms of your forbearance.
This is a very important part of the process, because the forbearance document sets the rules of engagement in the long run. You should carefully review any documents that you receive from the servicer to ensure that you are protected.
You should be able to answer the following questions upon review of your servicer's hardship documentation:
If you cannot answer these questions upon review of the documents sent by the servicer after the initial contact, you must continue to follow up. Likewise, if you do not hear from your mortgage servicer within 72 hours after the initial contact, it is in your best interest to follow up. Don't stop until you receive an answer.
An offer of forbearance should not be taken lightly. You must understand the scope of the help offered by your mortgage servicer before you stop paying your mortgage.
Not paying your mortgage always involves the risk of foreclosure. in the worst-case scenario, you lose your home and may face a deficiency civil action. Even if you don't face that worse-case scenario, you will likely be hit with late fees, penalties, court costs and attorney's fees that will eat up some of the equity that your home has earned since your purchase.
In my next post, I will go over Step 4. It involves dealing with the servicer when pursuing a long term remedy beyond your initial forbearance.
* - Don't forget to connect with me on LinkedIn, Facebook (English and Spanish) and Twitter!
STEP 3 - Follow up and review your initial forbearance documents
Most servicers are processing the initial requests for help without the need to provide substantial supporting documentation. They take the initial information regarding your hardship and then prepare a document outlining the terms of your forbearance.
You should be able to answer the following questions upon review of your servicer's hardship documentation:
- For how long is the forbearance?
- Is interest accumulating in the account?
- Will the servicer demand payment in full at the end of the forbearance?
- Will the missed payments be moved to the maturity date of your loan?
- When do I have to resume payments?
- Is the servicer open to an extension?
- Will the servicer offer a loan modification or repayment plan if necessary?
If you cannot answer these questions upon review of the documents sent by the servicer after the initial contact, you must continue to follow up. Likewise, if you do not hear from your mortgage servicer within 72 hours after the initial contact, it is in your best interest to follow up. Don't stop until you receive an answer.
An offer of forbearance should not be taken lightly. You must understand the scope of the help offered by your mortgage servicer before you stop paying your mortgage.
Not paying your mortgage always involves the risk of foreclosure. in the worst-case scenario, you lose your home and may face a deficiency civil action. Even if you don't face that worse-case scenario, you will likely be hit with late fees, penalties, court costs and attorney's fees that will eat up some of the equity that your home has earned since your purchase.
In my next post, I will go over Step 4. It involves dealing with the servicer when pursuing a long term remedy beyond your initial forbearance.
* - Don't forget to connect with me on LinkedIn, Facebook (English and Spanish) and Twitter!
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