Many Maryland homeowners with federally backed mortgages have been able to take advantage of special forbearance programs through the 2020 CARES Act during the past year. While some are ready to resume payments once the forbearance period is over, others may be in the same — or worse — financial position as before. This has some experts concerned that the number of foreclosures could soon be on the rise.
In June 2020, there were around 4.3 million homeowners who were using forbearance programs, many of which are ending their first 180-day periods. The CARES Act prevents lenders from reporting delinquent borrowers to credit reporting agencies so long as they were current before they entered forbearance. However, lenders can immediately report borrowers who are 120 days behind on their monthly payments and initiate foreclosure as soon as forbearance ends if it is not renewed.
While forbearance can be a lifeline for struggling homeowners, these programs are not always well understood. Few homeowners realize just how quickly foreclosure can proceed, especially if a lender chooses to take action before a borrower even has a chance to get an extension or seek a loan modification. Experts caution this can even threaten the financial recovery of entire neighborhoods and communities.
When struggling to keep up with one’s monthly mortgage payments, it is important to understand what options are available. Forbearance is a smart and appropriate choice for some homeowners, but not all. Others find that loan modifications, short sales or other approaches are best for their unique situations. Since there is so much on the line when it comes to foreclosure, some Maryland homeowners find it helpful to reach out for guidance from an experienced counsel.