The fadeout of the COVID-19 pandemic brings to an end a generous mortgage forbearance program embraced by millions of homeowners.

The 275,000 borrowers still deferring mortgage payments, however, could continue to receive a break into 2024, and mortgage regulators plan to extend mortgage relief for non-pandemic reasons moving forward.

“As forbearance is ending, we are now seeing new types of loss mitigation programs,” says George FitzGerald, an executive at mortgage technology and data provider Black Knight.

Here’s what to know.

Millions took advantage of COVID mortgage forbearance

When the pandemic decimated the global economy in 2020, then-President Donald Trump signed the CARES Act, which included a break for mortgage borrowers: Nearly anyone with a home loan could ask their lender for a payment pause. Millions of homeowners requested the relief, with some 7.8 million granted forbearance from March 2020 through March 2023, according to the Mortgage Bankers Association.

Those who entered pandemic forbearance needed to do little beyond contacting their mortgage servicer, the company that collects their monthly payments. Borrowers could stop making payments for six months, and if they needed more time, request an additional six months.

During this time, lenders couldn’t charge penalties or fees, nor report the missed payments to credit reporting agencies. The skipped payments were simply tacked on to the end of the loan.

The window is closing for pandemic forbearance

In April, President Joe Biden signed a bipartisan congressional resolution to end the nation’s COVID public health emergency. That signals the end of the pandemic forbearance program — although how soon is unclear.

The Federal Housing Administration (FHA) and U.S. Department of Agriculture (USDA) have given borrowers until May 31 to request pandemic forbearance. However, those granted forbearance on FHA and USDA loans could receive extensions into 2024.

Agencies haven’t announced an official cutoff date for borrowers of conventional loans or mortgages backed by the U.S. Department of Veterans Affairs (VA) — but the FHFA has said it’ll allow borrowers with conventional conforming loans to apply for a six-month payment deferral based on individual circumstances, rather than a broader event such as a hurricane or pandemic. Mortgage lenders must honor the FHFA’s new guidelines by Oct. 1.

“Based on the success of the COVID-19 payment deferral, we are making this solution a key part of our standard loss mitigation toolkit that is available to all borrowers with eligible hardships,” FHFA Director Sandra L. Thompson said in a statement.

“The agencies are trying to pivot, and take the best of what they’ve learned and apply it going forward,” says Marina Walsh, vice president of Industry Analysis at the Mortgage Bankers Association. “We could see forbearance being used to a greater extent for normal hardships like death, divorce, loss of a job.”

You have options if you can’t pay your mortgage

Most borrowers who took advantage of the pandemic relief have resumed making payments, but a small percentage remain in forbearance. Some are still struggling to recover from the COVID recession. Others might have been in trouble even before the pandemic.

“These are the harder cases for sure,” says Walsh.

If you’re having trouble paying your mortgage, communicate with your mortgage servicer, the company that collects your payment each month, as soon as possible. While it’s tempting to ignore your challenges, you’re likely to get more financial support if you address the challenge head-on.

Forbearance is just a temporary solution, of course. While the plan allows you to stay in your home without making payments, you’ll still need to repay your loan.

If you take the full forbearance allowed, you can defer mortgage payments up to a year, which means you’ll have to repay one year’s worth of mortgage and interest. Depending on lender, your repayment plan might look like:

  • Lump-sum payment: If you’ve been banking the money you haven’t been spending on mortgage payments, you could write a check for the entire missed amount.
  • Short-term repayment plan: This arrangement allows you to repay your forbearance amount over the course of six months. For example, if you postpone mortgage payments for five months and your monthly mortgage payment (including interest) is $1,000, then you owe $5,000. That amounts to $833 a month for six months. When you resume making monthly mortgage payments of $1,000, you would add $833 for six months until your mortgage is current.
  • Extended loan modification: This repayment plan extends your term by tacking the amount you owe to the back of your loan. For instance, if before your forbearance you had 15 years left on your loan and you postponed payments for five months, your new term would be 15 years and five months. This option changes no part of your loan except the term.
  • Flex modification: A flex modification is designed for borrowers who can’t afford the mortgage at their current interest rate and/or term. If this is the case, your lender will work with you to modify your loan so that it’s affordable for you.
  • Cap and extend: For borrowers who can’t afford insurance or taxes, the lender will make these payments on your behalf during the forbearance. After the forbearance period is over, the amount the lender paid would be applied to your principal balance and the term would be extended. In this instance, if a lender paid $5,000 in escrow payments and your balance is $100,000 over 30 years, your new balance would be $105,000 with a new term of 30 years and six months.

Because mortgage rates have gone up, lenders don’t have a lot of flexibility around rates, but some are willing to extend the length of your loan. The FHA last year rolled out a 40-year option for loan modifications. Say your original 30-year loan was for $200,000 at 5 percent. Your monthly principal and interest would be $1,074. If you can keep the same rate but extend the repayment schedule to 40 years, the monthly payment drops to $964.

Another relief option: Look into the Homeowner Assistance Fund, a federal program designed to help homeowners affected by the pandemic with housing costs, including utility bills and mortgage payments. (Some states have closed or suspended applications, so check your eligibility before going too far down this road.)

If you’re willing to move, you might be able to sell your way out of trouble instead. Home values have soared since 2020, and most homeowners are sitting on a pile of home equity. Selling your home could help you pay off your mortgage, and any remaining proceeds can provide living expenses while you get back on your feet financially. Here’s how to calculate your home’s equity.

“First and foremost, call your servicer,” says Walsh, “and call them as soon as possible, because there are more options available.”