Some mortgage forbearance stories have a good ending. Wells Fargo, for example, is quick to respond and help borrowers who have trouble paying their mortgage due to Covid-19. In fact, they have one of the most comprehensive websites explaining the types of mortgage assistance they offer. Upon request, they will suspend your mortgage payments for three months, and potentially extend the suspension for three more months. During this time, they will not report the missed payments to credit bureaus, unless you were previously in default.
The terms of repayment of your Wells Fargo mortgage can range from the several options, aligning with the CARES Act, depending your loan type and investor. Some examples of loan backers, or investors, are government sponsored enterprises (GSE’s) like Fannie Mae, Freddie Mac, VA -Veterans Administration, USDA and HUD. Here are the options Wells Fargo lists as possible solutions after the forbearance period ends:
- Lump Sum Payment (if you can) to repay the missed payments at once.
- Repayment Plan spreading out the missed payments over a few months, as agreed. For example, if you were $4000 behind, instead of paying $1500 per month for your regular mortgage payment, you could pay $400 more, or $1900 per month, for ten months, until the suspended amount of $4000 is re-paid.
- Loan Modification refinancing the whole mortgage balance to add in the missed payments. For example, if you owe $100,000 and skip $6000 in payments, your new loan would be for $106,000 and perhaps your interest rate would be changed.
- Mortgage Deferral There are two possibilities with deferral (or deferment). The first option, for example, would be if you skipped three months of payments, your loan term would be extended for three months. So, instead of having 30 months left on your mortgage, you would have 33 months. The second option would be to have the full amount of your skipped payments payble as a lump sum at the end of your loan or when you sell the house. So, if you skipped $5000 in payments, when you finally pay off your house or sell it, your last payment or payoff amount, would be $5000 higher. Here is a Wells Fargo deferral letter that illustrates the latter:
If you find that you need to sell your Emerald Coast real estate, contact me to discuss your options, whether traditional sale or short sale.
It’s Wendy… It’s Sold!
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Email Wendy: [email protected]
Wendy Rulnick, Broker, sells short sale, pre-foreclosure, REO and traditional real estate in Destin, Santa Rosa Beach, 30A, Miramar Beach, Crestview, Sandestin, Seaside, Rosemary Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Florida.
This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.