HOUSTON - Many homeowners are struggling to make mortgage payments in this economic crisis but haven't taken advantage of forbearance programs and could face foreclosure.
Others are beginning to exit their forbearance periods, where their lenders let them pause payments for 90 to 180 days. If you're struggling to make house payments, it's important to know your options and take action.
The American Dream can turn into a nightmare as mortgage experts fear there will be a rise in foreclosures.
The Mortgage Bankers Association says more than 4 percent of borrowers missed four or more payments over the last two quarters.
"We are actually seeing a percentage of people who are not taking advantage of forbearance so they are struggling with the mortgage payments. And for whatever reason they have not signed up for a mortgage forbearance program available to them," said Jennifer Keys, a mortgage compliance expert.
And the MBA says many of the 4 million homeowners in forbearance programs have begun exiting now that their 90 or 180 days are ending. The foreclosure process can begin if the borrower does not resume payments, make other arrangements, or extend forbearance, which can be up to 12 months on federally backed home loans.While some forbearance programs require a lump sum payment when the period ends, most add the skipped payments to the end of the loan.
"That can be anything like some of the payment deferment plans that have become available, where you're taking those paused payments and putting it at the end of the mortgage," said Keys.
Borrowers can also ask for a loan modification. "Maybe you can't make the full payment, ask what kind of modifications could I have? Can I get my interest rate reduced? Can I have a longer time, maybe a 40 year instead of a 30 year?" explained Keys.
Keys says it's critical for borrowers to stay in communication with their loan servicers about their ability to pay and learn their options.
The Mortgage Brokers Association breaks down these options here.