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Mortgage Forbearance

A guide to mortgage forbearance

In today`s economy many people are having trouble meeting their financial obligations. As a result of this there have been a large amount of homes that have been abandoned by their owners or foreclosed by the banks. Lending institutions were a little too generous in giving large loans to people who could not possibly afford to keep up the payments. The price of housing was in a bubble for a long time and when that bubble finally burst many people discovered they were stuck with high mortgage payments and property that was worth less than the cost of their mortgage.
In the past few years things have stabilized somewhat and lenders are now much tighter when it comes to their lending policies. There are, however, people who can get into temporary financial difficulties and these are the individuals who are ideally suited to a mortgage forbearance agreement.
So what exactly is a mortgage forbearance agreement? It is an arrangement or agreement made between a delinquent borrower and their mortgage lender. The lender agrees to forego the legal right to foreclose on the mortgage, while the borrower agrees to a mortgage plan designed to bring the borrower up to date on their payments over a certain amount of time.
Mortgage forbearance agreements are not long-term solutions for borrowers who are delinquent in their payments, but rather it is designed to help borrowers who are experiencing temporary financial setbacks caused by unexpected events, such as illness or unemployment. Individuals who have bigger financial problems, such as adjustable rate mortgages that had their interest rates reset to unaffordable levels, usually have to seek other remedies than mortgage forbearance agreements.
Pros and Cons of Mortgage Forbearance
In simple terms, mortgage forbearance makes it possible for the borrower to stop making mortgage payments. This is a plus for those who cannot make payments due to unforeseen circumstances. It can help people to avoid foreclosure and losing their homes. This is especially helpful for those who are suffering from a sudden illness that prevents them from going to work. Being made homeless on top of being ill and unable to work is a situation in which no one wants to find themselves.
Being able to stay in your home and knowing you have a respite from bill payments can speed the healing process since so much illness is caused by financial stress. Being able to keep the home you worked hard for is a lot better than having your home foreclosed.
Unfortunately, this solution is only temporary and usually only lasts over a period of several months until the homeowner can get back on their feet financially. Lenders are not doing this out of the kindness of their hearts but because they feel that they will wind up with more money from repayment of the original mortgage than from a foreclosure sale.
The homeowner must also keep in mind that while the payments are not being made, the interest rates on the mortgage continue to accumulate and are added to the remaining loan balance. Homeowners are generally required to sign forbearance agreements that state the date by which they are required to start making payments again. Once the forbearance period is at an end regular monthly payments will have to be made again. There are companies such as simplyfinance.co.uk that specialize in helping homeowners with financial solutions.

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Everything You Need to Know About the Risks of Mortgage Fraud

Here’s Everything You Need to Know About the Risks of Mortgage Fraud

Mortgage fraud occurs when a potential homebuyer, seller, or lender lies or omits key information that leads to a mortgage loan approval or terms that the applicant wouldn’t normally qualify to receive.

More formally,  the FBI defines  mortgage fraud as any “misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by a lender.”

Mortgage fraud is a serious offense and can lead to prosecution and jail time for convicted offenders. Under U.S. federal and state laws, mortgage fraud can result in up to 30 years in federal prison, and up to $1 million in fines.

The Growth of Mortgage Fraud

Mortgage fraud is a growing problem. According to CoreLogic, mortgage fraud increased 16.9% in the second quarter of 2017 vs. the prior year. The fastest-growing subset of mortgage fraud is occupancy fraud, which happens when mortgage applicants deliberately provide false mortgage application information to purchase a home.

How these hurricane-ravaged states have avoided a housing disaster -- so far

Homeowners were snarled in endless paperwork after Hurricane Sandy hit in 2012, with each government housing agency requiring different policies and homeowners owing balloon payments that came due immediately once the forbearance period ended.

So as the 2017 hurricane season got started in earnest, D.C.'s housing finance wonks came to government agencies with one fundamental ask: Design a uniform option that can give homeowners a break on their mortgages without getting them in trouble when the bills come due.

"We were unsuccessful during Sandy," says Meg Burns, a former Department of Housing and Urban Development official who now heads housing policy at the Financial Services Roundtable, which represents lenders and servicers. "That's what informed our thinking to get all of the government entities around the table to make some consistent policy."

Along with automatic forbearances for homeowners in hurricane-affected areas, Fannie, Freddie and the FHA came up with an option that allows borrowers to make the payments they skipped during the months after the disaster at the very end of the loan — without going through a modification that could force them to take on a higher interest rate.

Is it normal for banks to continue charging late fees while a mortgage is in forbearance?

I have a forbearance agreement with Wells Fargo for one year so I can catch up on my mortgage payments. They are continuing to charge me a late fees on the 17th of each month. Is this normal practice or just plain evil?


If they are charging late fees, there or 3 possiblities:
1. Your payments are not being made in accordance with the forbearance agreement.
2. You only THINK you have a forbearance agreement.
3. Wells Fargo is incompetent.

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