What is a government-backed loan? They are home loans owned by Fannie Mae or Freddie Mac (which make up about half of all mortgages in the U.S.); or insured by HUD, the VA, or the USDA. However, there is a difference between who owns a loan and who services your loan. The mortgage servicer is in charge of administrative aspects of a loan i.e. payments, handling escrow accounts, etc., which means your loan could be serviced by Chase Bank and owned by Fannie Mae.
How do I know who owns my loan? An easy way to find out who owns your loan is to call your mortgage servicer and ask them. They will also be able to tell you what options are available to you. You can also try to find out online who owns your loan:
Look up your loan at Fannie Mae
Look up your loan at Freddie Mac
When do I need to pay back the missed payments after forbearance? This is the most important question to ask when you are contacting your mortgage servicer about a forbearance. There are different repayment options, and it is important to understand what is being offered to you.
What are the repayment options? You will need to speak to your servicer directly to know exactly what your repayment options are. I am not a lender and cannot tell you what your repayment options would be. Commonly, with a mortgage forbearance, some of the repayment options include Lump-Sum Payment (all missed payments paid in one payment after forbearance period), Short-Term Repayment Plan (missed payments are divided and paid back over a period of time, usually about 6 months, in addition to your usual mortgage payment), or Extended Loan Modification (the missed payments get tacked on to the end of the loan). Whatever the repayment option is, please make sure it is something you will be able to do because failure to pay under the repayment plan will, unfortunately, lead to foreclosure by the bank.
What if my loan is not government-backed and is privately owned? Unfortunately, privately owned loans are not covered under the CARES Act. However, the government is encouraging lenders to work with their customers, and most are motivated to help and offer options. You will need to reach out to your lender to find out what is being offered.
This is a short, basic explanation of mortgage forbearance and the different repayment options available based upon my own personal experience and research. I am by no means an expert, and this is merely meant as some guidance and understanding. Each lender is different, and each loan is different. If you are considering forbearance, you will need to speak with your lender to know who owns your loan, to understand the options available to you, and to learn exactly what the terms of those options are.
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