Can Unemployment Forbearance Increase Your Mortgage Payment
by AJ from Carpentersville, IL and by Leonor
Ask Kate if unemployment forbearance (UP) increases your mortgage payment: AJ's husband was approved for mortgage forbearance after losing his job. Now with new employment, AJ is worried about having to pay back the 7 months of house payments suspended during the forbearance period. To make matters worse, a balloon payment on their Home Equity Line of Credit (HELOC) is coming up soon.
Continue to the comment section near the end of the page to hear from Leonor. Her 2nd mortgage lender won't admit their attempts to double collect payments from her, simultaneously through loan servicing and a collection agency.
Ask Kate: What Follows Unemployment Forbearance By AJ from Carpentersville, IL
Last summer, I tried getting my first mortgage with Citi modified because I also have a HELOC of $25,000 that is due in full in August to Bank of America - and we've only paid principal.
We were on the verge of falling behind on our first mortgage and wanted to prevent it. Citi denied us due to the fact that we weren't late on our mortgage. Ironically, 2 months later my husband got laid off for the 3rd time in 7 years!
So, we called Citi again and went through the qualification process all over again and were approved for Unemployment Forbearance til June 2016.
But my husband started working one month ago and I am at a loss of what to do. There is no way we can come up with 7 months of mortgage payments and now our HELOC is due in months.
I am thinking we would apply for HAMP, but I don't know how that works with having 2 mortgages.
Any advice on what to do with 2 mortgages after Unemployment Forbearance is over?
Kate's Answer: What Follows Unemployment Forbearance
Unemployment forbearance through a current lender reduces or suspends monthly house payments for struggling mortgage borrowers while they search for a new job. Just as HAMP modification and HARP refinance
will, this Making Home Affordable program also expires December 31, 2016 (unless it is once again extended.)
Citi, like other lenders, reviews their Unemployment Forbearance program
regularly. So while I can't guarantee it, I doubt that Citi is going to require you to fork over a total of 7 house payments immediately upon getting a new job.
Loan Modification After Unemployment Forbearance Ends
However, I could see them increasing your monthly mortgage payment to gradually repay the amount that was in forbearance by tacking a percentage of it onto each reinstated mortgage payment. If you can't afford the higher payment (assuming it increases), you could take it as an opportunity to apply for a HAMP loan modification
Modifying Your 2nd Mortgage
Then after Citi (hopefully) modifies your 1st mortgage, contact Bank of America about the Making Home Affordable 2MP program that modifies 2nd mortgages
Where to Turn for More Help
Once last thought. The steps I've given you are like pieces to a puzzle that needs solving. Try not to be overwhelmed. But do take action, one step at a time. I'd encourage you to call a HUD-approved housing counselor
whenever you feel you are hitting a brick wall with Citi and Bank of America. Or you might want to call one of these housing experts before you tackle the lenders.
These counselors are free and available 24 hours a day, 7 days a week, including holidays, they say. Try calling during non-peak hours to reduce your wait time.
Making Home Affordable states that as soon as a borrower on unemployment forbearance gets a job, the loan servicer should be notified.
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