After Forbearance – Now What?

After Forbearance – Now What?  
Covid-19 has impacted homeowners across the country. With job losses and 
income reductions, many have taken advantage of the ability to enter a 
forbearance program with their lenders. During the forbearance program, the 
agreements state that no late fees will be assessed, and the balance of missed 
payments will be deferred to the end of the loan.  
As a result, many homeowners have been able to keep their homes during this 
time of economic upheaval.  
Some of these affected may now have stabilized incomes and are ready to exit 
forbearance. They might be wondering if they will be penalized for this if they 
choose to refinance or buy a new home. Fortunately, there is good news for these 
homeowners. Part of the program is that the lender will not report these late 
payments to the credit bureaus so the borrower will not have that issue to 
contend with when they are ready to find a new loan.  
Lenders understand that this is a unique situation and that it is not representative 
of the way a borrower will remit payment in the long run. Additionally, some 
potential homebuyers may need to relocate to take advantage of new 
employment opportunities—requiring them to sell their homes and buy new 
ones. The good news is that homeowners who exit their forbearance plans can 
apply for a refinance or new loan after 3 consecutive, on-time mortgage 
payments.  
Covid-19 has impacted our lives in many ways. Fortunately, the lending 
community has taken unprecedented steps to ensure the long-term damage to 
individuals and housing is minimized as much as possible.