Forbearance And Job Loss: Get Temporary Relief From Your Mortgage Payments

If you're behind on your mortgage payments because you lost your job, you may fear losing your home to foreclosure. But instead of giving up and letting the bank take your home, talk to a real estate attorney about forbearance. Forbearance is an option you have over foreclosure, which is the permanent loss of your home. Once your home enters foreclosure, you may not have a chance to get it back or keep it. Here's why forbearance is a better option over foreclosing your home and how your attorney can help you get it.

What Does Forbearance Mean?

Banks can legally foreclose on your home within 90 days after you miss one or more mortgage payments. If you haven't found a new job during this time, you can ask the lender for a forbearance on your loan.

Forbearance offers temporary relief of your mortgage payments for at least six months after your bank schedules your foreclosure date, or after you miss your first mortgage payment. However, if your lender won't extend your overdue mortgage payments because you missed payments in the past, you'll need the help of an attorney.

What If You Have a History of Late Payments?

A history of not paying on time may hinder your ability to receive temporary relief for your mortgage payments. The bank may think that you won't follow through with the forbearance agreement. In this case, your real estate attorney can negotiate a forbearance agreement based on new unemployment laws.

In the past, banks and mortgage lenders allowed clients to suspend some of their mortgage payments if they lost their jobs. Clients who didn't find employment within the allotted time period often lost their homes to foreclosure anyway. Now, many financial institutions give their clients up to six months of little to no mortgage payments while they look for work. 

All you need to do is provide proof of your unemployment, which can include a signed affidavit from your former employer. If you collect unemployment, you may need to submit this information as well.

Keep in mind that your unemployment payments may be too small to use toward your mortgage payments. The attorney will subtract your bills and other living expenses from your unemployment benefits. If you don't have enough left over to pay on your mortgage during the forbearance, the real estate lawyer will give the mortgage lender proof of this. 

In addition, if you still haven't found somewhere to work, your attorney can request an extension of your forbearance agreement.

How Long Is Your Forbearance Extension?

An extension on your forbearance agreement can go up to 12 months, depending on your mortgage holder and job status. Your lender will request proof of your continued unemployment before granting your extension. Your attorney will most likely ask you to bring in specific paperwork regarding this, which he or she passes on to the lender.

For example, you may need copies of any:

  • Extended unemployment benefits you receive
  • Companies you visit during your job search
  • Unemployment companies that help you look for work

If you receive state benefits to buy food or obtain medical care, be sure to bring in copies of this information as well. Also, provide birth certificates and names of any minor children you have in the home. The funds you receive from unemployment are essential for their care, so this may help you when you request an extension.

Keeping your home when you face job loss isn't easy. But with the right information and real estate attorney, you can apply for temporary relief through forbearance. If you have questions about forbearance, contact your attorney for more information. Click here for additional reading on how a real estate lawyer can  help you.