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By now you sure have heard about the government’s forbearance program. If you are considering forbearance, there are a few things you need to know and some important decisions to make. It is essential you find a solution that fits your financial situation. Here is how the program works: 1. Forbearance is an agreement between a lender and borrower to temporarily suspend dept in order to avoid costly foreclosures. ... 2. The program allows you to defer your payments for up to 180 days, with a possible extension of another 180 days. 3. Forbearance is not forgiveness. You still owe the full amount; you just defer payment. 4. Your options depend on what type of loan you have. Mortgages backed by a federal agency like FHA, Fannie Mae and Freddie Mac will have options that differ from non-federally backed mortgages. 5. Forbearance is not automatic. You will have to talk to your loan servicer and see a) if you qualify and b) under what terms and conditions. 6. A forbearance agreement is negotiable. Borrowers can and should negotiate their agreement and make sure it fits their specific financial situation. 7. You will not owe any late fees or penalties if you are granted forbearance, nor should it impact your credit rating. However, your regular interest will still accrue. 8. If you can make your payments, keep paying. Don’t clog up the process with an unnecessary application. The most important details are in the payback options. Here are a few: a. Balloon payment. With a balloon payment, a borrower will have to pay back the entire amount owed for the forbearance period all at once. This will set up most borrowers for failure as the lump-sum bill could become due before the crisis ends. b. Amortization over the term of the loan. This option will split the amount of the forbearance and add it to your monthly payments. c. Term extension. Think of this as a temporary time freeze of your loan. The missed payments will be added to the back of your loan, so the loan will extend for the time of the forbearance. d. Loan modification. Loan modification is a permanent change to the details of your mortgage. This can include an adjustment in any of the loan terms, like interest rate, duration, a separate lien, etc. However, your loan terms are legally binding, and lenders are hesitant to permanently modify loans. The first step is to evaluate the options you have. Talk to your mortgage servicer/lender. Make sure you negotiate an instrument that fits your situation, one that is feasible for you to fulfill. Always, always, always get your agreement in writing, and keep a detailed log of all communication with your lender. And be aware, there are scammers out there who try to take advantage.

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