Before continuing, it is important to note the following: Mortgage forbearance is not equivalent to mortgage forgiveness. What does this mean for you as a homeowner experiencing financial hardship? All mortgage payments deferred during an applicable forbearance period still require repayment to the lending institution servicing your home mortgage loan.

This further emphasizes the necessity of planning ahead to ensure you are capable of making your regular mortgage payments on top of any additional payments due when your forbearance period ends. While each mortgage lender institutes different forbearance and repayment policies, most will allow some type of payment plan. 

Allowing for a repayment plan helps ensure lenders eventually receive their money. For example, homeowners forced to make unaffordable monthly forbearance repayments are no better off than they were when experiencing COVID-19-related financial hardships. Not only does this defeat the purpose of granting forbearance in the first place, but it also significantly reduces the likelihood of lenders getting repaid for paused mortgage payments.

Speak to your home mortgage loan provider about possible repayment plans offered by the institution. Your personal situation might play a role in determining how lenient and borrower-friendly a repayment plan you are offered. Complete mortgage forgiveness is not currently available, although mortgage payment deferral might be an option as well.

What type of homeowner relief program is a mortgage deferral plan? If your lender is agreeable, you might be granted permission to defer all back mortgage payments owed from your forbearance period until you sell your home. This gives you time to regain your financial footing. Your lender also receives all borrowed money by the same end date it would have received its final mortgage payment regardless of your forbearance. Granted, this type of leniency negates profits and the value of your equity both when you sell your home. The significant upside is your ability to end a period of severe financial stress without experiencing continued hardship.

Loan modification is another option to alleviate mortgage forbearance repayment-based hardships. Loan modification refers to changes made to your loan terms to include your new forbearance debt. The amount you owe due to forbearance is simply added to the total of your mortgage loan and the term of your mortgage is extended. Forbearance debt-based mortgage loan extensions are typically granted based on:

• Your personal, medical, employment and financial circumstances.
• Your credit rating.
• Lender policies.
• The combined amount you owe on your mortgage and forbearance debt.

Common mortgage loan term extensions last between a few months to several years. One benefit of this type of extension is your monthly payments are reduced, which provides you financial breathing room. If you have no plans on selling your home prior to paying off your mortgage, pursuing a loan modification functions (in some ways) the same as a refinance loan program

The U.S. federal government is continuing to monitor the ongoing pandemic and the effects it has on the housing market, however. More relief might be possible as time moves forward. If you need additional help paying your mortgage, contact your lender directly for all available options.