Mortgage Forbearance vs Deferment, there is a HUGE difference between the two options.
Please share information about any mortgage or servicing company in the comments below so I can add it to this list. The reason I created this is because what most mortgage companies are offering doesn’t make a lot of sense. Most are offering to defer mortgage payments for 90 days BUT then in the 4th month they want all 4 mortgage payments made which is insane. How can you expect people to be able to do that when they are just getting back to work. And we don’t even know if people will be back to work. We are about 45 days into this quarantine as I write this and we might have another month or two before stay at home orders are lifted.
I have found very few lenders that are actually providing REAL relief and adding the missed mortgage payments to the end of the loan. Here in San Diego a friend shared this with me. The image below is from Mission Federal Credit Union. They are adding the missed mortgage payments to the end of the loan. Bravo to them for doing it the right way and providing homeowners real relief.
It’s really important to understand what type of relief your mortgage company is offering. There is a big difference. Are they offering you a forbearance or deferment? Here are some examples of mortgage forbearance vs deferment taken from Cenlar, Citi’s mortgage lender:
Deferment suspends the principal and interest portion of your mortgage payments for a specific period of time and defers them to the end of your loan. If your loan is federally-backed, you are not eligible for deferment under the CARES Act. However, if your mortgage loan is not backed by the federal government you may be eligible for other options like deferment.
Forbearance: Under the CARES Act, there are new options for homeowners. However, as with all major financial decisions – and especially with those affecting your home – you should carefully consider all the implications, weigh your options and run the numbers. Take a look at these examples to help determine if forbearance is right for you:
1. John’s monthly mortgage payment is $1,500 and is due on May 1. He chooses a 90-day forbearance in May. As a result, the forbearance period will run from May through July. During this time, his monthly mortgage payments are suspended. At the end of the forbearance period, John will owe a total of $6,000 on August 1. That is, he will owe $4,500 for the May through July payments, plus his August payment of $1,500 (total = $6,000).
2. John’s monthly mortgage payment is $1,500 and is due May 1. He chooses a 180-day forbearance in May. As a result, the forbearance period will run from May through October. During this time his monthly mortgage payments are suspended. At the end of the forbearance period, John will owe a total of $10,500 on November 1. That is, he will owe $9,000 for the May through October payments, plus his November payment of $1,500 (total=$10,500).
Here is a list of lenders and what they are offering in terms of Covid-19 Related Mortgage Relief, quoted verbatim from their respective websites. As you can see they don’t usually spell out what happens at the end of the deferment/forbearance period, so be sure to call and find out for yourself. In the rare instance where banks do explain what happens at the end of the deferment/forbearance period, the explanations are bolded and colored red.
Ally Bank – “Current Ally home loan customers can defer their payment for up to 120 days with no impact to your credit (starting from the day you contact us; interest will still accrue, but we won’t charge late fees on payments due during this time).” (more info)
Bank of America – ” [ 1 ] The Bank of America Payment Deferral Program is available for customers who have only one payment due on their loan. We’ll defer three payments and extend the term of your loan by three months. [ 2 ] The Bank of America Payment Forbearance Program is available for customers who have more than one payment due on their loan (for example, one missed payment and one payment currently due). We’ll work with you to understand your specific needs and recommend a forbearance period of three months. [ 3 ] If a third party owns your loan (e.g. Fannie Mae, Freddie Mac) or if your loan is insured by a third party (e.g. Federal Housing Administration), we will follow their guidelines and offer you a payment forbearance. Under a payment forbearance, we’ll work with you to understand your specific needs and recommend a forbearance period of either three or six months.” (more info)
BB&T / Suntrust / Truist – “If you’re unable to make your next payment or if you’ve already missed a payment, you can suspend mortgage payments for an initial period of 90 days (3 months) or 180 days (6 months), with possible extension for up to a year, depending on your circumstances. This is called a forbearance. Under this program, you won’t be charged any penalties or late fees, and your account won’t be reported as delinquent to the credit agencies.”
“If you can’t pay your suspended payments and/or resume your payments after the initial period, we’ll continue to work with you. You can continue with the payment suspension through additional time in forbearance, up to a year depending on your loan type, or you can consider one of 3 ways to repay your suspended payments once your hardship is resolved:
1) set up a plan where you can repay the suspended payments in agreed terms over a period of time,
2) pay at the end of your loan term, or
3) set up a loan modification, which restructures the rate and/or term of your loan to reduce your monthly mortgage payment based on what you can afford.”
(from their mortgage relief FAQ- pdf link)
BMO Harris Bank – “If you have a mortgage or home equity loan with BMO Harris, you may be able to defer your regularly scheduled payments for up to three months if you have been impacted by COVID-19, subject to qualification. Payment deferral does not mean loan forgiveness… If you do not qualify for a payment deferral on your BMO Harris mortgage or home equity loan because you are more than 60 days past due, you will be evaluated for a forbearance.”
“If you have a Federally-backed mortgage serviced by BMO Harris, you are entitled to a 180 days of forbearance of your regularly scheduled payments if you have suffered a financial hardship as a result of COVID-19. The initial 180 day forbearance period can be extended for another 180 days upon request. Forbearance does not mean loan forgiveness. Forbearance means an agreement to allow you to make reduced or no payments during the forbearance period. You are never required to pay back your forbearance in a lump sum at the end of the forbearance period. Your loan servicer will reach out to you before your forbearance plan is scheduled to end to determine which assistance option is best for you to repay the money you owe, for example: a repayment plan that allows you to catch up gradually while you are paying your regular monthly payment, or a modification of your loan terms if you have a sustained reduction in income resulting from the crisis. Of course, you are always free to pay the full amount.” (more info)
Charles Schwab Bank – “If you are a Schwab client who currently has a mortgage or home equity line of credit (HELOC) through Charles Schwab Bank, SSB and Quicken Loans, you may be eligible for mortgage payment relief… You can request payment relief in order to suspend your monthly mortgage payments for a period of time, up to 90 days. During this time, interest will continue to accrue on your loan. The past due amount must be paid at the end of the 90 day period, or you can contact Quicken Loans to discuss a non-credit impacting loan modification. There is no fee to make this request and this will not impact your credit rating.” (more info)
Chase – “If you can continue making your mortgage payments, you should do so. You can enroll in payment assistance by signing in to chase.com … What if I can’t restart payments at the end of my forbearance period? You’ll be able to request an extension, and we’ll make that easy for you to do. We’ll check in with you near the end of the assistance period to help you understand the available options. What happens to any missed payments? Many customers who can resume making their full payment after the assistance period can defer missed payments to the end of the mortgage. We’ll check in with you near the end of the assistance period to help you understand your options.” (more info)
Citi / Cenlar – “Citi’s mortgage sub-servicer Cenlar FSB is offering 90-day forbearance for Citi’s mortgage loans where the borrower is experiencing hardship, during which there will be no negative reporting to the credit bureaus for up-to-date customers. In addition, foreclosures and evictions have been paused.” (more info) (Additional information on Cenlar website)
Citizens Bank – “1. Payment assistance for up to 90 days (varies by product) with no credit bureau impact (Auto, Credit Card, Mortgage, Student Loans, Home Equity Loans, Home Equity Lines of Credit) 2. Late fee waivers (Auto, Credit Card, Home Equity Loans, Home Equity Lines of Credit, Mortgage, Student Loans) 3. Home foreclosure suspension for up to 60 days: This is automatic; there is no need to contact us” (more info)
Fifth Third Bank – “Up to 180-day payment forbearance with no late fees (Interest will accrue during the forbearance period for products where payments are being deferred or waived). Mortgage customers in need of assistance have three options at the end of the forbearance period: 1. Make a lump sum payment after the forbearance period expires 2. Agree to a repayment plan with our hardship team 3. Be evaluated for loan modification workout options to move missed payments to the back of loan, extending the loan term.” (more info)
Flagstar Bank – “If your ability to pay your mortgage has been impacted by COVID-19, Flagstar is offering eligible customers immediate relief by way of a six (6) month forbearance plan. Customers who opt-into this plan will have at least 180 days of late fee waiver, and suspension of all negative credit reporting … When you regain employment or replace your income, (whether that is during the six month forbearance period or thereafter), you will work with our COVID Relief Task Force to reset your loan to fit your new circumstances. Options will vary by your loan type, owner, and how many payments are missed. If you are unable to repay your missed payments, your options will include things like extending your loan by adding the missed payments on the end of the term, dividing up the missed payments over the remaining term, or simply paying what has been missed to bring you current. If you are not ready to resolve your delinquency after six (6) months of forbearance, you may request an extension to this plan for up to an additional six (6) months.” (more info)
Guaranteed Rate – “Under the CARES Act, eligible consumers with a “Federally backed mortgage loan” (as defined below) are entitled to certain forms of relief, including: [ 1 ] Mortgage forbearance for up to 12 months. [ 2 ] A prohibition on lenders/servicers charging additional fees, penalties or interest during the forbearance period. [ 3 ] A moratorium on lenders/servicers initiating foreclosure actions for 60 days, until at least May 17, 2020. [ 4 ] A prohibition on lenders/servicers reporting delinquencies related to forbearance to the credit bureaus … Forbearance is really a last resort. While forbearance may be an option to help you through this crisis, remember, once your forbearance is over, any partial or paused payments will need to be paid in full … At the end of the forbearance period, you’ll need to pay the mortgage amounts that were reduced or suspended during the forbearance period. Your lender/servicer will help you determine the best option for you, which may include: [ a ] Repayment Plan – you pay an extra amount to be added to your regular mortgage payment until the amount you owe from forbearance is paid in full. [ b ] Lump Sum Payment – you pay the full amount owed in one lump sum payment. [ c ] Loan Modification – if you are unable to pay a lump sum or additional amounts with your regular mortgage payment, your lender/servicer may offer other options and may work with you on a loan modification – which may include extending the end of your loan to give you additional months to pay the forbearance amount.” (more info)
Guild Mortgage – ” … [ 1 ] Guild Mortgage will not adversely credit report your loan(s) for March, April and May. [ 2 ] Beginning April 1 and extending for 60 days, Guild will waive Late Charges for all borrowers (April and May). If you expect COVID-19 to impact you for a while, in partnership with Fannie Mae, Freddie Mac, the FHA, the VA Home Loans program, and the USDA Rural Development Guaranteed Housing Program, Guild Mortgage is able to offer an initial relief option of a forbearance on your Federally Backed loan, which is a temporary stoppage or reduction of your mortgage payments. Once the crisis is over, we will work with you to determine the best course of action when you’re ready to resume payments. The options available at the end of the forbearance will depend on your financial resources, investor or insurer/guarantor guidelines applicable to your loan, and other factors.” (more info)
HSBC – “For mortgage and home equity loans, we’re offering assistance with payments, including deferrals, reductions and late fee waivers during the hardship. We’re also protecting your credit by preventing negative credit reporting.” (more info)
Huntington National Bank – “Huntington is offering up to 90 days of payment deferral on all consumer loans for those experiencing financial hardship due to COVID-19. Although interest will continue to accrue during the payment deferral period, you will NOT have to make a single ‘catch-up’ payment at the conclusion of the deferral period. We’ll work with you, and either extend the term or otherwise modify your loan. For those customers with federally backed mortgage loans, Huntington will offer mortgage loan forbearances consistent with the provisions in the CARES Act. (more info)
Loan Depot – “You may be eligible to postpone your monthly payments with a forbearance. A forbearance is short term payment relief for customers who are willing to make their monthly payments, but face temporary, unforeseen financial hardships. If you are unable to repay the payments that are due at the end of the forbearance period, other options such as a forbearance extension, repayment plan, deferment of forborne payments or loan modification may be available to you.” (PDF link)
M&T Bank – “…we continue to work with government housing agencies to refine assistance programs. The final resolution will most likely result in a modification of your loan once the hardship has passed. Modifications typically include extending the term of your loan which will result in an increase in the total interest paid for your loan. It is for that reason, that we encourage you to continue to make your monthly mortgage payment if you have the means to do so.” (more info)
Navy Federal Credit Union – “If you’re eligible, we can offer a forbearance that temporarily suspends your mortgage payment requirements… At the end of the forbearance period, the missed payments will either be spread throughout the remaining term of your loan or added to your last scheduled mortgage payment. You may also choose to pay back the payments at the end of the forbearance period… If at the end of the initial Forbearance Plan period, you’re still impacted, we may be able to extend the Forbearance Plan for a longer duration.” (more info)
New American Funding – “The immediate option is a forbearance plan that will temporarily suspend payments for a limited period of time. During the forbearance plan period, we will suspend all late fees and negative credit reporting on your account. These payments are not waived, instead they will be due at the end of the forbearance period. However, if you are still experiencing financial hardship at the end of your forbearance period, your forbearance plan can be extended. At the end of your forbearance period, New American Funding will work with you to determine what options you may qualify for if you are unable to repay the outstanding payments. Depending on your loan and circumstances, such options may include a repayment plan or a loan modification.” (more info)
New York Community Bank – “We offer 90 day residential mortgage payment forbearances to customers whose income has been adversely affected by events linked to COVID-19.” For payment/refinance options at the end of the forbearance period with NYCB click here.
PNC Bank – “If you are unable to make your payment, we may have options to help you navigate through this unprecedented time. Specifically, we will consider assisting those impacted customers by waiving or refunding fees associated with lending products, including credit card and mortgage. If you are concerned about making a consumer loan, auto loan, credit card or mortgage loan payment, we have a variety of programs available to assist you. Solutions may include the ability to postpone payments for a period of time. You may be able to postpone your monthly payment with no late fees during the postponement period…” (more info)
Quicken Loans / Rocket Mortgage – “If you’re unable to make your payments due to COVID-19, you can enroll in a forbearance program to pause your mortgage payments … A forbearance will pause your mortgage payments for three months. After three months, we’ll help you decide if you need to apply to extend your forbearance. While your payments are paused, we recommend paying what you can to reduce your balance at the end of the program. When your forbearance ends, you can pay the past-due payments in a lump sum to get back on track immediately. If you’re not able to do that, you can apply for a repayment plan or loan modification to help you catch up over time.” (more info)
Santander Bank – “Temporary payment suspension, and refunding late payment and overdraft fees, Stopping collections calls, and suspending mortgage and home equity line of credit foreclosures.” (more info)
TIAA Bank – “If you’re experiencing financial hardship because you’ve lost work, are ill, or are caring for a sick family member due to COVID-19 and have concerns about making payments, please know that help may be available in the form of temporary payment forbearance. This means that TIAA Bank will pause your monthly mortgage and home equity line of credit payments for a specific period of time. Those payments will be made up at a later date.” (more info)
Union Bank – “We are taking action to assist our mortgage and home equity line of credit clients who have been impacted by the COVID–19 outbreak by offering payment relief options during this challenging time. This includes the option to select a forbearance plan: – Flexibility to make no, partial, or full monthly payments during plan
– Suspension of late charge assessments
– Suspension of delinquency reporting to credit bureau agencies
– Forbearance does not erase the amount you owe on your mortgage. You will have to repay any missed or reduced payments. Extension or other modification options available following the forbearance period. ” (more info)
U.S. Bank – “If you’re having trouble keeping up with your mortgage payments, you may qualify for an assistance plan (forbearance). The assistance plan could include suspended payments for up to 180 days with no late fees during the forbearance. Your account will be reported as current and on a forbearance to credit agencies, which will not have a negative impact your credit score.”
“Repayment plan – A repayment plan allows you to pay your regular monthly payment plus additional funds applied to past-due amounts. Payments are distributed over an agreed-upon period of time.
Hardship loan modification – This option allows you to roll interest and escrow shortage from delinquent payments into the existing loan. You may qualify for an interest-rate reduction to have the term of the loan extended.” (more info)
Webster Bank – “Options for payment deferrals on mortgages, home equity or personal loans, and small business loans, based on need… In addition, Webster is placing a 90-day foreclosure moratorium on Webster residential loans.” (more info)
Wells Fargo – “If you’re experiencing financial hardship due to COVID-19 and are unable to make your regular mortgage or home equity payments, we can help. You can request an immediate payment suspension — a temporary pause of your loan payments for an initial three months. It’s best to request payment suspension only when you really need it because you may need to repay any missed payments at the end of the short-term relief period.
…During payment suspension: (-1-) We won’t charge late fees or report additional missed payments to the credit bureaus. (-2-) If the account is past due, we won’t refer the account to foreclosure at this time. Please understand any suspended payments will need to be repaid at some point. The payments may be due right away at the end of the suspension, or they might not be due until later. This depends on your loan. You should only request the short-term relief if you need it.
…After the payment suspension period ends:
– An additional payment suspension – You may be able to continue the six-month payment suspension for up to an additional six months.
– A lump sum payment – If possible, you repay the entire amount due at once.
– A repayment plan – We’ll divide the amount due from the missed payments into manageable amounts, spread out over time.
– Payment deferral – We’ll move the amount of the suspended payments to the end of your loan term.
– A loan modification – We may be able to change certain terms of your loan — such as the interest rate or the time allowed for repayment — to make payments more manageable. Your modified payment amount is based on your current financial situation and takes any hardship into account.” (more info)
Filed Under Covid-19 CoronaVirus Updates – Mortgage Companies Providing Mortgage Relief – Mortgage Forbearance vs Deferment