Updated about 5 years ago on . Most recent reply
Forbearance benefits and downsides
I've decided to use the forbearance option on all of my properties due to COVID-19 related hardships, and it has really helped to pad my bank account. A recent conversation with a client/friend of mine made me question whether I really have a correct understanding of how it works. For you lenders out there, are there any cons for borrowers to use this option? For those of you with loans and eligibility to use forbearance, are you doing it? Why or why not?
Most Popular Reply
There was much confusion when the forbearance came out. Many thought the payments were moved to the end of the loan. That was not accurate for the majority of lenders. Although payments were deferred many lenders stated all payments were due in 90 days. That meant if you are given the forbearance and your payment was $1000, you would owe $3000 in 90 days plus your next payment. It would not hurt your credit that was true sort of, although on your credit report it shows forbearance for those months you took it. Now lenders are penalizing people for taking it and saying they won’t lend to you for 2-4 years. It seems worse then if you filed bankruptcy or were foreclosed on.
Leave it to the government to stick it to us or not protect us from the bankers that always seem to come out on top. It’s good to be the bank.
Good Luck.