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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 that specialize in helping homeowners with financial solutions.

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Hurricane victims can get a break on mortgage payments, but beware of scams

If you live in a hurricane-battered area of Texas or Florida, your mortgage lender may be willing to give you a break.

Many lenders are offering financial relief in the aftermath of hurricanes Harvey and Irma: They’re putting mortgage payments on hold, freezing foreclosures or offering special financing to help rebuild damaged home.

But scammers are stepping forward, too, using social media and emails in clever ways to prey on homeowners in financial need.

Here are ways to find the right financial relief program quickly without getting trapped.

Call your lender directly

It may take longer than clicking on the “apply here” link in a spam email advertising mortgage relief, but tracking down and phoning your lender is the safest route to confirming that an assistance offer is for real.

Before the call, try to gather as much information about your financial situation and mortgage as possible. It’s important to lead the conversation knowing how much help you need and what you can afford to pay on your home each month. This not only helps the lender assess what you qualify for, but it also helps you avoid taking on more debt than necessary.

Mortgage breaks for Irma victims

(WSVN) - Hurricane Irma is adding only even more stress when it comes to our monthly bills. But you may be able to get a break when it comes to your cable service and even your mortgage. That’s tonight’s edition of Help Me Howard with Patrick Fraser.

Irma stuck it to Manuel Salazar, first hitting his property, then his wallet, with a bill for the cleanup.

Manuel Salazar: “I’m guessing it’s somewhere 1500 to 2000 is what they are telling me.”

But even after Irma moved away, she still kept hitting him — because this baseball umpire can’t work.

Manuel Salazar: “It’s been eight, nine days since I worked.”

No money coming in, lots of money going out and a mortgage payment on the horizon.

Manuel Salazar: “So I obviously have to address that.”

But some mental and financial relief for Manuel — He does not have to make his mortgage payment.

Malloy Evans: “Taking a break from your mortgage payments for a while to help you stabalize.”

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.