Mortgage Forbearance

User Forum Topic
Submitted by barnaby33 on April 15, 2020 - 10:41am

What if any downside is there to asking for 3 months mortgage forbearance? There seem to be no late fees or penalties. It gives you 3 months to hold on to a wad of cash and if something negative happens to you during those 3 months, then you've got cash! What am I missing here?

Josh

Submitted by Coronita on April 17, 2020 - 8:32am.

except he doesn't sound like he really needs the money now, and he could shoot himself in the foot of he needs access to more money beyond just 3 months. Do lenders plan on keeping a record that you skipped 3 months of payments? And will that information be available and considered the next time you need to refinance or take out a HELOC? Can one even open a HELOC if one's first loan isn't paid to current? I guess he can find out. Or get the HELOC first and then ask for a forbearance? Then again that might look suspicious to the first lender determining if they will grant a forbearance if they check and a HELOC was open recently. Meh, too much work for me...

Its been awhile since I refinanced but the last.time I did it, I seem to remember they went though my existing loan and HELOC with a fine tooth comb to make sure I was current on both. Then again, it's been awhile since I had a loan and maybe things are different now.

Submitted by svelte on April 17, 2020 - 8:35am.

Coronita wrote:
except he doesn't sound like he really needs the money now, and he could shoot himself in the foot of he needs access to more money beyond just 3 months.

Using the numbers I roughed in above, it would take him 2.5 years just to get a single dollar ahead with your method.

Just a single dollar. And that's if he gets to skip a payment when doing the refinance.

Submitted by Coronita on April 17, 2020 - 9:26am.

svelte wrote:
Coronita wrote:
except he doesn't sound like he really needs the money now, and he could shoot himself in the foot of he needs access to more money beyond just 3 months.

Using the numbers I roughed in above, it would take him 2.5 years just to get a single dollar ahead with your method.

Just a single dollar. And that's if he gets to skip a payment when doing the refinance.

He could get a slightly higher rate but still below his current and get a few thousand in rebate up front, what AN use to do. He could do a slight cash out refi give himself more than a 3 month cushion of he really needed the cash soon. None of which would make sense if he doesn't actually need the cash up front now. And if he just want an emergency slush fund to tap, that's what a HELOC is for. But again, he said it himself. He doesn't really need the money he has plenty of emergency reserves, so this seems like it's just an exercise to see if the system can be gamed for the sake of gaming it. So with that, like I said, go for it

Submitted by svelte on April 17, 2020 - 9:38am.

Coronita wrote:

He could get a slightly higher rate but still below his current and get a few thousand in rebate up front, what AN use to do. He could do a slight cash out refi give himself more than a 3 month cushion of he really needed the cash soon.

Neither of those choices does much to make your solution a better choice because they drive the monthly payment higher - which was the centerpiece of your option to begin with.

Submitted by PCinSD on April 17, 2020 - 9:52am.

FlyerInHi wrote:
PCinSD wrote:
FlyerInHi wrote:

Everything you write speaks do me. I feel like I get it whenever you write it.

Ikr?

A rare, yet not entirely unexpected Adult Hallmark moment right there. Please update us if you guys hookup.

Scaredy is the most beautiful writer here. There’s a certain quality, a je ne sais quoi. I am in admiration, in love.

Easy Disco. I saw him first. And he's way out of your league.

Submitted by FlyerInHi on April 17, 2020 - 11:18am.

will barnaby qualify for a refi if his income dropped quite a bit?

Why not apply for forbearance? There is no fee for doing it; and who knows, if we have a depression, forbearance maybe extended for a whole year or more

Submitted by barnaby33 on April 21, 2020 - 9:49am.

Kind of hard to imagine we aren't in depression already. 25 million people lost their jobs in the last 4 weeks. That's just the number of folks who qualify for the insurance programs. There are more than likely equal numbers or more who are contractors or otherwise fall through the cracks.

I didn't ask the question or make the initial post for myself, it was a category question, though Coronita did offer several helpful ripostes once he got done with his moralizing.

Sour grapes, fuck yes! There are a few people still on this blog who were here throughout the bubble (myself included) and it's implosion. People who spent years preparing and not being dipshits, only to watch the Fed steal from them at the point of an Excel spreadsheet. People who thought we had a body of law to deal with fraud only to find out it's only fraud when it's not the wealthy doing it. The only person who went to jail was Martha Stewart. If you're not angry, you just aren't paying attention.

This bubble, much like the last is nothing more than fancy math to cover inter generational warfare. I'm Gen X and I literally weep for what the Boomers have done to the Millenials and done with a straight face.

All that having been said, we're being dealt a certain hand of cards and I asked, what can I do to maximize my security given the current circumstances. Save your morality plays for those who haven't already seen what those in power will do to preserve their place.

Josh

Submitted by FlyerInHi on April 21, 2020 - 10:29am.

barnaby33 wrote:

I didn't ask the question or make the initial post for myself, it was a category question, though Coronita did offer several helpful ripostes once he got done with his moralizing.

Flu/coronita has a hard time accepting we’re in a HUGE recession after making fun of people who would prepare for one.

Flu often refuses to look at the aggregate big picture. It’s always about him winning.

If people have loss of income they should qualify for mortgage forbearance. They should apply and conserve cash. That’s only prudent.

Submitted by Coronita on April 21, 2020 - 12:19pm.

FlyerInHi wrote:
barnaby33 wrote:

I didn't ask the question or make the initial post for myself, it was a category question, though Coronita did offer several helpful ripostes once he got done with his moralizing.

Flu/coronita has a hard time accepting we’re in a HUGE recession after making fun of people who would prepare for one.

Flu often refuses to look at the aggregate big picture. It’s always about him winning.

If people have loss of income they should qualify for mortgage forbearance. They should apply and conserve cash. That’s only prudent.

Well Brian/FlyerInHi, I have to say, you did pretty well. You lasted almost 2 weeks before reverting back to the shithead you normally are before volleying those initiated personal attacks, despite getting all butt hurt when you get them yourself. Congrats, I think 2 weeks was a record for you. And you got it completely wrong. I have the deepest sympathy for almost everyone who is impacted by this horrific pandemic event, however they are impacted, except maybe you Brian. But good luck to you. Lol.

Josh, if you want to get a mortgage forbearance, go for it. I was merely saying that (1) if you don't really need one it might not be worth the hassle and (2) if you have to misrepresent your financial state in order to get one, you also might want to reconsider that. But, do what you got to do. I have a feeling you're fortunate and not nearly as impacted as people who really need this, given that you seem to fit the mold of being pretty financially savy.

Submitted by FlyerInHi on April 21, 2020 - 12:38pm.

Flu, read back my comment on the recession thread. I try to focus on the economy as a whole. You are the one who likes to infer personal motivations. I do it rarely.

The economy has cycles and there are winners and losers. The economy will go through cycles, regardless.

As a general rule, when homeowners no longer have the income they qualified with when they obtained the mortgage, they should qualify for forbearance. It’s a zero interest loan which allow households to conserve cash. It only makes sense to apply.
Depending is how the economy goes, the forbearance may be extended and borrowers may not required to catch up. It’s an evolving situation.

Submitted by barnaby33 on April 26, 2020 - 2:19pm.

Get a room you two.
Josh

Submitted by gzz on April 27, 2020 - 7:09pm.

The three month forbearance is essentially a tiny HELOC folded into your mortgage balance at the same rate and terms. As long as its paid I don’t see why people get moralistic about it. If you find getting e.g., $8000 at 3.75% apr attractive, you’re probably not rolling around in excess cash.

At the moment about 6.7% of mortgages are in this program.

Submitted by Coronita on April 27, 2020 - 8:08pm.

I changed my mind. If you still have a mortgage, get one if you can, for up to a year. Why not?

I'm really curious how this is going to work out so please do report back how it works out for you if you plan on trailblazing this.

Logistically, I'm also curious how would this work wrto mortgages with an impound account that's paying for the prop tax and insurance once you stop making payments. Do they still pay and you have a negative balance on your impound or do they stop doing the impound and you need to deal with the insurance and prop tax payments?

Submitted by Coronita on May 20, 2020 - 5:45pm.

https://www.cnn.com/2020/05/20/success/m...

told you these forebearances have some side effects.

Can't refinance loans.
Can't take out new loans.
(IE, if you found a new property at a good price and need a new loan, you might not be able to get one).

Still think the UI benefit gravy train is the better option to go.

Submitted by scaredyclassic on May 21, 2020 - 11:37am.

contemplating one last refi.

current 3.375, 30 years, bal less than 200k

looking at about 2.7, 15 years, no cost.

maybe wait a little bit? i feel like it should be a little lower...

got a low rate from sofi.com, cheaper than aimloan and amerisave.

anyone have any internet lender they like nowadays?

planning hopefully to pay it off in 5-8 years, so not looking at a huge savings. but still, a few thousand

Submitted by Coronita on May 21, 2020 - 12:02pm.

scaredyclassic wrote:
contemplating one last refi.

current 3.375, 30 years, bal less than 200k

looking at about 2.7, 15 years, no cost.

maybe wait a little bit? i feel like it should be a little lower...

got a low rate from sofi.com, cheaper than aimloan and amerisave.

anyone have any internet lender they like nowadays?

planning hopefully to pay it off in 5-8 years, so not looking at a huge savings. but still, a few thousand

2.75% on the 15 year was what I got a few years ago before I paid it off. I think maybe it can go lower.

Submitted by scaredyclassic on May 22, 2020 - 7:10am.

from mortgage news daily

Ongoing Reminder on Forbearance

Coronavirus has created unprecedented challenges for people and industries. For homeowners facing a big reduction in income due to coronavirus-related hardship, a forbearance can make excellent sense. But for those who have the capacity to continue making mortgage payments, there are downsides to consider. Forbearance itself does not hurt your credit score, but it does show up on your credit report. This will affect your ability to qualify for a loan in the present and near future. It can also result in your other creditors decreasing your available credit balances. This has the unintended effect of increasing your ratio of debt to available credit which is a key component of credit scoring models. Thus, even though forbearance itself is not hurting your credit, it can indirectly lower your credit score and it will absolutely impact your mortgage creditworthiness in the short term.

Submitted by svelte on May 22, 2020 - 7:44am.

Coronita wrote:
scaredyclassic wrote:
contemplating one last refi.

current 3.375, 30 years, bal less than 200k

looking at about 2.7, 15 years, no cost.

maybe wait a little bit? i feel like it should be a little lower...

got a low rate from sofi.com, cheaper than aimloan and amerisave.

anyone have any internet lender they like nowadays?

planning hopefully to pay it off in 5-8 years, so not looking at a huge savings. but still, a few thousand

2.75% on the 15 year was what I got a few years ago before I paid it off. I think maybe it can go lower.

I'm at 2.75 15 year also.

If I were you I'd take it scaredy. Maybe it will go lower, maybe it won't. If it goes lower it won't be by much. A bird in the hand...

Submitted by Coronita on May 26, 2020 - 9:21am.
Submitted by evolusd on May 26, 2020 - 10:35am.

Sometimes I wonder if I'm too conservative. Save for retirement, keep liquidity for shocks like these, live within my means, etc.

My old neighbor told me they're putting in a pool because they got a mortgage forbearance and the wife is actually making more on unemployment than she did working. All this after they drained their retirement to buy the home and were on a payment plan with the IRS for the big tax hit they weren't expecting.

A POOL!

Submitted by Coronita on May 26, 2020 - 10:57am.

evolusd wrote:
Sometimes I wonder if I'm too conservative. Save for retirement, keep liquidity for shocks like these, live within my means, etc.

My old neighbor told me they're putting in a pool because they got a mortgage forbearance and the wife is actually making more on unemployment than she did working. All this after they drained their retirement to buy the home and were on a payment plan with the IRS for the big tax hit they weren't expecting.

A POOL!

Hey, I'm making more for being furlowed 1 day than if I work that day. But I'm generally being responsible. They'll get what's coming to them.

Look at it this way. Instead of putting money towards a pool, if you stuck it into the markets during the downturn, you will be coming out well ahead.

Submitted by FlyerInHi on May 27, 2020 - 12:13am.

evolusd wrote:
Sometimes I wonder if I'm too conservative. Save for retirement, keep liquidity for shocks like these, live within my means, etc.

My old neighbor told me they're putting in a pool because they got a mortgage forbearance and the wife is actually making more on unemployment than she did working. All this after they drained their retirement to buy the home and were on a payment plan with the IRS for the big tax hit they weren't expecting.

A POOL!

That’s the American way. It helps the economy for those who invest.

Submitted by Coronita on May 28, 2020 - 9:10am.

Mortgage forbearance... coming soon to refinance denial near you... Like hell there's no consequences to getting one.

https://www.forbes.com/sites/dimawilliam...

One facet of forbearance that Santa-Donato says is little known is the potential temporary inability to refinance a home loan afterwards. While suspending mortgage payments avoids “delinquency in the eyes of credit reporting agencies,” it does count as a “gap in payment from an underwriting standpoint,” he says.

If a borrower misses two consecutive payments on a government-backed mortgage in the span of 12 months, he or she would be ineligible for a loan refinance for a year, says Santa-Donato.

“I had to clarify this with some of the underwriting experts on our side,” he says. “That's something that I haven't heard spoken about at all as a particular downside to forbearance.”"

Submitted by ltsddd on May 28, 2020 - 9:18am.

Shouldn't be much of an issue since most people should already be at the low rate of 3.5% or lower.

Submitted by Escoguy on December 11, 2020 - 2:36pm.

Ok, so does anyone have good data on forbearance volumes in SD county?

I looked on Calculated risk and they had 2.7M nationwide.

On balance I've read that 95%+ of renters in SD are making payment on time.

I did talk to a lender who mentioned this as a reason for rates being higher than should be in addition to lending backlog.

One realtor also mentioned there could be more supply in the spring once the forbearance period ends, but for now I almost think that is wishful thinking.

Any real data would be helpful esp by zip.

This was good mortgage info on daily movements:

http://www.mortgagenewsdaily.com

I hope I'm not violating anything by putting a link, just seems like good info.

Cheers,

Submitted by sdrealtor on December 11, 2020 - 6:34pm.

Anecdotally I know someone who took a 3 month forebearance. She went back to paying in full and they just tacked the missed interest onto the balance. After 3 on time payments she became eligible to refi and will be lowering her rate by 0.75%. It was a small blip on her radar though very scary at the time but i guided her through what to do. I think a lot of people will be in that boat and anyone who is still unemployed will be sitting on even more equity than they had. It may give us some more of the inventory our market is starved for but over all a non event here

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