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Mortgage forbearance explained: Why you still need to pay the bill eventually

If you've been impacted by the coronavirus and need help with the mortgage, banks can offer forbearance, which lets you pay at a later date.

CALIFORNIA, USA — Hundreds of banks have set up a mortgage relief program due to the coronavirus, but those forbearance programs do not mean no payment ever.

Last week, Governor Gavin Newsom announced a relief package that would help homeowners impacted by the coronavirus. Hundreds of financial institutions offered mortgage forbearance. It generally means that if you ask for help on your mortgage from the bank and qualify, then you don’t have to make your payment at this time. 

"Essentially, it's a break in making your mortgage payment until a future date," said Beth Mills, senior Vice President of the California Bankers Association.

Some big banks have set up 90-day forbearance programs, and others are doing this on a case-by-case basis every 30 days. Despite the availability of forbearance programs, Mills said you still need to take the first step and call your lender.

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Contact your lender

"Not everybody’s going to automatically not have to pay their mortgage, so you'll need to make sure that you reach out to your lender and talk with them…," said Mills.

If you aren't familiar with your lender, you can find it simply enough by looking at your mortgage statement. From there, they'll be able to point you in the right direction.

It's an important step because some loans, like a Freddie Mac or Fannie Mae loan, might be serviced by another financial institution. 

Why forbearance isn't one size fits all

There's no single category that all these forbearance programs fit into. Some vary by the length of forbearance, customer situation, and actual ownership of the loan.

"Really, it's just wanting to make sure that we’re doing the best we can to help each individual customer, because no one situation is completely the same," Mills said.

She explained that financial situations make customers unique. While some customers might recover in 30 or 60 days, there'll still be others that might need the full 90 days or possibly longer.

Forbearance on the coronavirus relief package won't hurt you

Mills says the forbearance programs won't hurt the banks, and, with the protections from the governor, they won't hurt customers either.

If your taking part of this coronavirus-related relief program, the banks will not be sharing your missed or late payment to the credit reporting agencies. As long as this has been worked out and confirmed by your lender, Mills says there won't be much to worry about.

Banks are no strangers to forbearance programs. These are the same programs you'd be relying on if you lost a job or had a medical problem that impacted your ability to make payments.

"There are forbearance programs that are out there for those unique individual financial situations," said Mills. "This obviously is on a much larger, massive scale given what we’re currently experiencing."

Ask your bank for more help if you need it

Mills said it’s worth talking to your bank, lender, or financial institution to find out what’s available to help you. She says some banks offer no fees on certain withdrawals and overdraft, however, these might be offered on a case-by-base basis.

Regardless, she and association are encouraging people to call their bank and let them know if you have a hardship.

"There's a number of programs and things out there that are banks are going to try and minimize this financial impacts on our customers as much as we can," said Mills.

For more information, see the coronavirus response from your bank or financial institution. Quick links to major banks are provided below:

For a full list, click HERE

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