Forbearance VS Deferment – Know Your Mortgage Options

By Uncategorized April 7, 2020

I know that during this time there are many that are exploring different relief options as this pandemic is having some detrimental financial affects. I wanted to write this memo so that you are aware of the difference between a forbearance and a deferment on your mortgage. Many people are calling their servicers to get assistance and I believe it’s important to get an understanding of what they are currently offering.

 

A forbearance agreement is an agreement that an owner of a property with a mortgage is making with the lender that is servicing their loan to agree to accept money down the road rather than get payments now.  So for example if your monthly payment is $3,000 the bank could give you a 90 day forbearance. Meaning you don’t need to make your May, June and July payment. However the big caveat is in August you would have to pay all the missed payments at once plus your August payment. That would be $12,000 due in August. As of now there is no clarity on how the banks are going to proceed if you cannot make all the payments at once. The banks are not clear if you will be able to refinance or negotiate the payment at the end of the forbearance.

 

In contrast a deferment pushes your payments out to when the note is due. So for example if you have a 30 year note and your bank offers a 90 day deferment this pushes your note to 30 years plus 3 months.

 

Both programs should not negatively impact your credit but it’s important that you clarify that with you bank and get the agreement in writing. Also it is important to note that just because you make a payment to Bank of America for example that does not mean they own that note. They could just be servicing that note for another investor that is offering different options that are not noted here. Make sure to ask who owns your note so that you are more informed.

 

I have included a link below from the Consumer Financial Protection Bureau with some helpful information and you can always contact me should you have any questions. Stay safe!

 

Coronavirus Mortgage Relief Options

About the Author
Jose Peralta
Jose Peralta
Since 2006 I have been a leading Realtor in the Los Angeles area. Having closed hundreds of transactions, and winning various awards, I am honored to be in the Re/Max “Hall Of Fame” for sales production. Through my career I have built deep relationships within the real estate community as well as highly successful business’ and investment groups. I have vast experience in traditional real estate sales, investments, flip properties, and other aspects of real estate As a personal touch agent with extensive market knowledge and complete devotion to my clients my success is based almost exclusively on positive referrals.

Specialties Include: negotiating contracts, providing detailed analysis of specific market areas, sales and marketing, relationship building, flipping properties and real estate investment strategies.

While going to college I began working for a company in Los Angeles that produced ink and toner cartridges. I began there in purchasing and worked my way up to manage and lead the production department. I oversaw all of the purchasing for the company, oversaw the inventory and scheduled production lines according to sales. After working with the company for 3 years I moved down to San Diego and worked for a sales company within the same industry as their international sales manager. There I helped build new relationships with various people in foreign markets. I specialized in creating collection programs with companies in Spain, South America, Mexico and Central America. This position gave me time to craft my sales skills and learn how to apply them. Shortly after that I became part of a start up team and created my own company. We worked hard as a start up and within a few years built a profitable multi-million dollar ink and toner cartridge business. The company focused on collecting empty ink and toner cartridges from other countries. We also created fundraising programs with local schools throughout the United States. We helped local schools in various parts of the country to organize their students and staff to bring in recyclable ink cartridges, toner cartridge and cell phones and receive a donation for them. We also implemented the program with various Chambers of Commerce. The company was later successfully merged and I stayed on to consult for some time. During this time I started to get a passion for real estate. I began with investing in some duplex properties and decided I wanted to learn more and get more involved. I started working at Re/Max and was mentored by an agent that had over 15 years of experience. Under her mentorship I came to appreciate and love the ability to help clients with their real estate needs. I started a team and have always stayed focused on putting my client’s needs first. Real estate can be intimidating even for a seasoned buyer and seller. I pride myself in working closely with my clients to try to make the process as seamless as possible. I am responsible for building and maintain relationships with potential buyers, sellers and investors. Although I started in a down market I have seen nothing but growth within our team.