The Mortgage Bankers Association (MBA) Forbearance Agreement: What You Need to Know
With the COVID-19 pandemic causing unprecedented financial difficulties for many homeowners, the Mortgage Bankers Association (MBA) has introduced a forbearance agreement to help alleviate some of the burden. If you`re a homeowner struggling to make your mortgage payments, here’s what you need to know about the MBA forbearance agreement.
What is the MBA forbearance agreement?
The MBA forbearance agreement is a temporary pause in mortgage payments that aims to help homeowners who are experiencing financial hardship due to the COVID-19 pandemic. Under the agreement, participating mortgage servicers will allow homeowners to defer their mortgage payments for up to 180 days, with the possibility of an extension for an additional 180 days.
Who is eligible?
To be eligible for the MBA forbearance agreement, homeowners must have a mortgage loan that is owned or backed by Fannie Mae or Freddie Mac, or been originated by a private lender and serviced by a participating servicer. Additionally, homeowners must have experienced a financial hardship related to the COVID-19 pandemic, such as a job loss, reduced work hours, or increased healthcare expenses.
How does it work?
To apply for forbearance, homeowners should contact their mortgage servicer and explain their financial hardship. Once approved, the homeowner will be able to defer their mortgage payments for up to 180 days, with the possibility of an extension for an additional 180 days. During the forbearance period, interest will continue to accrue on the mortgage, but late fees and penalties will not be charged.
What happens after forbearance?
After the forbearance period ends, the homeowner will be required to repay the deferred mortgage payments, either in a lump sum or through a repayment plan. It’s important to note that participating in forbearance will not negatively impact the homeowner’s credit score.
The MBA forbearance agreement is a helpful resource for homeowners who are experiencing financial hardship due to the COVID-19 pandemic. If you’re struggling to make your mortgage payments, be sure to reach out to your mortgage servicer to discuss your options and see if you’re eligible for forbearance. Remember, it’s important to stay informed and take advantage of the resources available to you during these difficult times.