On December 2, 2020, Fannie Mae and Freddie Mac extended the foreclosure moratorium from December 31, 2020 to January 31, 2021. This moratorium, which originally began on March 18, 2020, prohibits most mortgage companies from beginning a foreclosure proceeding. It also prohibits the entry of a foreclosure judgment or a foreclosure sale if a foreclosure proceeding has already begun.
This extension is good news for countless homeowners who are struggling to pay their bills because of the pandemic. To make the best use of this extension, however, you will want to begin looking for a long-term solution right away.
Here are 3 ways you may be able to avoid foreclosure during the pandemic.
1. Mortgage Modification
Most mortgage companies offer loss mitigation options, including mortgage loan modification. Mortgage modification allows a borrower to change the terms of their mortgage loan and effectively cure their default.
If you are behind on your mortgage, it is critical that you contact your mortgage company before the moratorium is lifted. In general, your lender will be much more likely to work with you if you get in touch with them sooner rather than later.
Under the CARES Act, you could also request a forbearance on mortgage payments if you have experienced a COVID-19 hardship. A forbearance may permit you to skip payments for a few months and prevent foreclosure. For many mortgages, this option ends on December 31, 2020. Before you enter into a forbearance make sure you understand how the missed payments will be handled when the forbearance period ends. The lender may agree to add the missed payments to the back of your loan (deferral). However, they could also request that you pay all the missed payments right away in a lump sum (reinstatement). Others will require you to re-pay the skipped payments over a year or less (repayment). Also keep in mind that forbearance will hurt your credit score, but it may be worth it if you believe you will soon be able to start making monthly payments again.
3. Chapter 13 Bankruptcy
Chapter 13 imposes an automatic stay that stops foreclosures immediately and gives the borrower up to 5 years to get their mortgage loan current. The Wisconsin Bankruptcy Courts also have a Mortgage Modification Mediation (MMM) program that allows borrowers to modify their mortgage and defer a mortgage default to the end of the loan. Additionally, the Chapter 13 can discharge any remaining unsecured debts once you complete your plan.
Discuss All Your Options with Our Team
Finding the right solution to your financial crisis can be a challenge. However, our attorney at Sapinski Law Office, P.C. has more than 20 years of experience helping clients obtain freedom from unmanageable debt. Whether we help you modify your mortgage, review your forbearance options, or use bankruptcy to achieve long-lasting financial relief, you can count on us to prioritize your best interests and provide the support you deserve.Schedule your no-cost consultation by calling (888) 298-1041 or contacting us online today.