Mortgage Forbearance & Credit Monitoring

Credit Monitoring

Free credit reports are essential for every consumer. They give you the opportunity to check for factual errors, items that are out-of-date, identity theft issues, and fraud.

It’s always important to stay on top of your credit score. And during a major economic crisis? Doubly so.

If you’re having trouble keeping up with loan payments, keep a close eye on your credit standing.

CARES Act rules state that mortgages in forbearance should not be reported as having late or missed payments. And the forbearance plan should not harm your credit score.

Remember, lenders and servicers have never before had to deal with mortgage forbearances on this scale. So it’s up to the borrower to be extra-vigilant and make sure nothing slips through the cracks.
Check your loan statements every month and stay on top of your credit report.

The big three credit reporting bureaus — Equifax, Experian, and TransUnion — have all made free credit reports available on a weekly basis through April 2021.

Consumer Financial Protection Bureau

Consumer Financial Protection Bureau is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly. 

If you need further mortgage or housing assistance go to the CFPB web site.

CFPB WEB SITE

You can get free credit reports at the government-mandated site annualcreditreport.com. This is the only truly free, no-strings-attached credit report available to all U.S. consumers.

Starting in 2020, the Federal Trade Commission (FTC) says that “everyone in the U.S. can get 6 free credit reports per year through 2026 by visiting the Equifax website or by calling 1-866-349-5191. That’s in addition to the one free Equifax report (plus your Experian and TransUnion reports) you can get at AnnualCreditReport.com.”

The Federal Deposit Insurance Corporation (FDIC) says consumers are entitled to a free credit report in certain circumstances, but only if you ask. The special circumstances include:

  • If a person has taken adverse action against you because of information in your credit report;
  • Identity theft cases and the placement of a fraud alert in your file;
  • If your file contains inaccurate information as a result of fraud;
  • If you are on public assistance; or
  • If you are unemployed but expect to apply for employment within 60 days

Forbearance eligibility

Under the CARES Act, homeowners with conventional, FHA, VA, or USDA loans could request an initial loan forbearance for up to six months. They could also request a six-month extension, for up to one year of total forbearance. 

In total, more than 2.5 million remained in forbearance plans as of late February 2021.

Updated forbearance extensions

  • Homeowners with conventional loans can request one additional 3-month extension, for 15 months total loan forbearance. To be eligible, you need to have been in a COVID-19 forbearance plan prior to February 28, 2021
  • Homeowners with government-backed loans (FHA, VA, USDA) can request two additional 3-month extensions, for up to 18 months total forbearance. To be eligible, you need to have been in a forbearance plan prior to June 30, 2020

If you have questions:

The Department of Housing and Urban Development vets housing counseling agencies. You can contact a HUD-approved agency for advice before or after getting in touch with your mortgage servicer, regardless of loan type.

Typical forbearance options, be sure to ask your mortgage servicer about all available options:

  • Full repayment, which is a one-time lump sum payment. It’s possible to pay back all the missed payments at once. But lenders are NOT allowed to require this.
  • Intermittent payments, where you arrange repayment with your servicer over 3, 6, 9, or 12 months — whichever makes the most sense — on top of your regular payments
  • Lengthen your loan term and pay off the missed amount at the end of the extended loan term, with additional mortgage payments
  • Payment deferral. This option lets you pay off the missed amount when the home is sold, refinanced, or at the end of the loan term

Refinancing after forbearance:

Typically, you won’t be able to refinance right away. 

But you might be able to do so after you’ve been making payments for a few months.

For most major loan types — including conventional, FHA, and USDA loans — you need to have made at least 3 consecutive payments after exiting forbearance in order to be refinance-eligible. 

Refinance waiting periods on FHA loans may be less than 3 months for some borrowers who qualify for a Streamline Refinance.

The VA loan program doesn’t impose a specific waiting period to refinance after forbearance. It only says VA lenders must verify that the borrower has recovered from their financial hardship.

Refinance requirements will vary by lender. 

As long as you meet basic credit, income, and debt requirements, you shouldn’t have to wait longer than 3 months after your forbearance plan ends to refinance