Congress passed the CARES Act last month on March 25. The 2 trillion dollar plan includes relief for homeowners.
Homeowners are anxious and confused about how it works.
A forbearance of your mortgage does not mean forgiveness.
So, if you are struggling financially because of the pandemic, first communicate that to your lenders.
Many banks are suspending foreclosures and delaying payments.
Banks like Wells Fargo, Citi Bank, JP Morgan, and US Bank agreed to a 90-day grace period.
At the end of the three months, homeowners will are expected to pay back those missed payments in one large lump sum.
It’s where the CARE Act stops and confusion sets in.
Repayment options all depend on the lender. It makes all the difference if it’s a government-backed loan or a private one.
When KION check with two banks, Chase and Bank of American, we were told there are two options for homeowners who cannot make a large payment at the end of the grace period under the CARE Act. People have 6 to 12 months to pay back the missed payments. Some homeowners might be able to extend the life of the loan. Every contract is different, therefore the sooner a homeowner communicates their financial struggle the better.
Under forbearance, a homeowner does not have to pay fees or any additional interest.