Many borrowers whose mortgages went into forbearance when the CARES Act passed have since seen that protection expire.

If you’re soon to be required to start making mortgage payments again, it’s important to know what your options are. The most important thing is to communicate with your mortgage servicer. Being upfront about your situation allows them to work with you to find the best solution. You’re much more likely to face an unpleasant situation — possibly even foreclosure — if you try to dodge the lender.

What is mortgage forbearance and how does it work?

Mortgage forbearance provides a form of relief to borrowers struggling to afford their monthly mortgage payments. It allows you to reduce the amount you pay or pause payments altogether for a set period without ruining your credit. During the forbearance period, your lender will report your loan as current to the credit reporting agencies to avoid adverse credit consequences.

You’ll need to contact your lender or servicer and enroll in a forbearance plan before you stop making payments.

When does forbearance end?

If you entered a mortgage forbearance plan under the CARES Act, it was initially valid for 12 months. However, many borrowers took advantage of the six-month extension that was available if more time was needed to get their finances on track.

What to do when mortgage forbearance ends

If you’ve reached the end of your forbearance, you can request an extension, make a payment, modify your loan or sell your home.

Request a forbearance extension

If you’re still in your first forbearance period, you likely qualify for at least one extension, but you won’t automatically get one unless you speak to your loan servicer, so it’s important to be in touch.

“We’re here to support you; don’t let it impact your credit negatively,” says Jennifer Kouchis, senior vice president of Real Estate Lending at VyStar Credit Union in Jacksonville, Florida. “If we don’t hear back from you, we don’t have a choice in the next step of the process.”

If you don’t respond to your lender and are taken out of forbearance, but fail to make payments, it will likely have a strong negative impact on your credit. So, keep the lines of communication open.

Make a payment

Most mortgage borrowers aim to weather the storm of financial difficulties and stay in their homes. In such cases, there are a number of options for addressing short-term cash issues and figuring out how to stay in place.

Keep in mind that forbearance is not loan forgiveness, but a form of temporary relief to help you remain in your home. You’ll eventually need to repay the skipped payments, and according to Kouchis, most lenders give you these options:

  • A lump sum payment, which means paying the entire amount you missed all at once
  • A short-term repayment plan or a loan modification, which is usually an additional monthly charge on top of your regular mortgage payment to make up that difference

“There’s a whole lot of tools in the toolkit of servicers, but lenders need to be able to contact the borrower,” says Marina Walsh, vice president of Industry Analysis at Mortgage Bankers Association.

Modify your loan

Depending on your lender, you might be eligible for a loan modification. This involves permanently changing your mortgage terms, like the repayment period, interest rate or principal balance, to make the monthly mortgage payments more affordable.

You’ll have to resume payments if the lender agrees to modify your loan once your forbearance ends. Also, be mindful that a loan modification is sometimes only offered to borrowers that can demonstrate that the current payment is unaffordable. Be prepared to provide the lender with financial documentation to plead your case.

Sell your home

Your lender or servicer might be able to help you on the road to your next living situation, and probably wants to avoid foreclosing on your home as much as you do.

If you’re open to relocating, selling your home could be a way to avoid foreclosure.

“A lot of these borrowers have equity in their homes,” so they can sell their current houses and use that equity to help pay off their existing mortgage and possibly fund a down payment on a cheaper house, or at least put some money into savings after the sale, says Walsh.

“Another option if they don’t want to proceed with the foreclosure route and they’re willing to move, there are programs like Cash for Keys,” in which the lender assumes the title of the home, but might provide the borrower with some relocation assistance to help them settle in a new, more affordable housing situation, says Walsh, adding that a borrower and their lender might also consider a short sale. That’s when you sell your home, and even if the proceeds are not enough to pay off the full mortgage, the difference is essentially forgiven.

Keep in mind there are also HUD-certified counselors or other housing advocacy groups in your area that can help you figure out which post-forbearance plan is best for you.

Current state of forbearance

Forbearance was a popular option for homeowners in distress during the pandemic thanks to the CARES Act. It allowed borrowers with Fannie Mae-, Freddie Mac- and government-backed loans dealing with financial hardship relief for up to 18 months.

Many private lenders also extended forbearance protection to their mortgage holders, even though they were not required to by law. However, many plans have now ended or will be ending soon.

Bottom line

If your forbearance period is ending, that doesn’t mean you’re about to lose your house, even if you still can’t afford your mortgage payments. Stay in touch with your lender and see what options are available to you.

“It’s better to call and think through options instead of hiding under a rock,” says Walsh.

“Don’t be afraid or embarrassed to ask for help if you need it,” adds Kouchis.