A huge portion of the country is facing financial hardship due to the COVID-19 pandemic. There is major concern about what will happen with mortgage payments during this time. The federal government has passed legislation to help borrowers obtain a forbearance of their monthly payments, but this option comes with certain risks.

Based on early reports, it appears that each loan servicer or investor will be making their own decisions about how to handle repayment plans. Many people are finding out that any missed payments will be due immediately at the end of the forbearance period.

 For example, if a borrower is granted a 90-day forbearance, they would be required to pay the entire amount due immediately at the end of that period. This option provides some short term relief, but could create a major problem for people whose jobs have not returned or that are not otherwise in a position to pay that lump sum when due.

Borrowers should be sure they understand the options that are available to them, especially the timeline their lender is setting for repayment of any missed payments. Failure to do so could be setting homeowners up for even bigger problems in the future.

Make sure to take notes about each phone call with the loan company. Write down the date of the conversation, which person you spoke with and the details of the conversation. Definitely keep copies of all correspondence you receive in the mail, especially statements and letters. In the event there is an issue, this information will be critical for an attorney to review in connection with defending your home from a potential foreclosure.