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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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American Consumer Credit Counseling Offers Tips on Paying a Mortgage

ACCC explains what every consumer should consider when dealing with a mortgage

Boston, MA (PRWEB) July 27, 2017

Properly managing, monitoring and paying a mortgage can seem like a daunting task. If you are having trouble paying your mortgage, you are not alone. Many Americans are facing this same problem and mortgage companies are very familiar with this situation. This financial tool was designed to benefit consumers, and with the right information and aid, getting on track with mortgage payments is possible. To help consumers with the process, national nonprofit American Consumer Credit Counseling has provided several tips on paying a mortgage.

"Mortgage lending is one of the most fundamental and useful functions of a bank," said Steve Trumble, President and CEO of American Consumer Credit Counseling, which is based in Newton, MA. "Your lender has probably already experienced what you are struggling with, and wants to help you to make successful payments. Do not be intimidated by looking outside of your bank for help as well; make sure you make use of all the resources available.

From Forbearance To Garnishments: 5 Things We Learned About ...

Reuters recently took a deep dive into the world of student loan debt, looking at the borrowers who struggle to make payments, the servicers that fail to provide support, and the government, which contracts with questionable companies to collect these debts.

The investigation contains a wealth of information and consumer stories about the state of education debt and the efforts to collect on those debts. We suggest you read the entire piece, but here are five things we found interesting.

1. $137.4 Billion Default

Reuters reports that 11% of the $1.325 trillion in federal student loans currently in circulation are either considered delinquent or in default.

In all, about eight million borrowers are in default with $137.4 billion in federal student loans. At this rate, the default is higher than it was during the mortgage crisis.

“There is an  uncanny resemblance  between the foreclosure crisis and our student default dilemma,” Rohit Chopra, a senior fellow with the Consumer Federation of America, told Reuters.

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.