In the real estate industry, the current market trends vary from coast to coast. While some areas such as the Golden State of California and Baltimore, Maryland are considered to be on the mend, other areas like Phoenix, Arizona are still being hit hard by foreclosure and weak market values. Regardless of the area, those who are having financial problems may be able to get a break courtesy of mortgage forbearance.
This economic mixed bag of tricks is expected to linger on until the national job market improves. According to statistics provided by the U.S. Department of Labor, August 2010 had a 9.6 percent unemployment rate. Many experts have predicted that by years end, the numbers will entrench into the double-digit mark. Job market instability is considered to be the largest factor holding back a full economic recovery in the nation, and that is negatively impacting the real estate market as a whole.
If you are experiencing the negative impact of the economy first hand in the form of being seriously delinquent on your mortgage, all is not lost. For those interested in keeping the roofs over their head and avoiding foreclosure, mortgage forbearance might provide you with the breathing room needed to get back on the economic (and monthly payment) track.
What is Forbearance?
Thanks to the government proclamation that deemed big banks as "too big to fail" the private banking industry's reputation has been shattered. Despite the anger being aimed towards the lenders, they have actually been responsible for keeping more Americans in their homes than the Governments’ lack luster Home Affordable Modification Program (HAMP) program. Part of it could be attributed to private lenders willing to grant forbearance to certain qualified borrowers.
Mortgage forbearance is the act between a mortgage lender and the delinquent borrower that prevents the lender from immediately exercising their legal rights to foreclose on a property. This right is temporarily suspended if a borrower agrees to a mortgage restructuring for a brief period of time and that will bring the borrower up to date on their mortgage agreement. Forbearance is not considered a long-term solution however, it can assist borrowers with temporary financial woes. Unemployment and health issues are some reasons that a lender may agree to negotiate forbearance terms.
Freddie Mac Favors Forbearance
The most popular types of mortgage assistance programs are currently mortgage modifications and short sales, however, Freddie Mac CEO Charles E. Haldeman Jr., recently stated that forbearance is still a viable alternative for those in need. Government assisted mortgage provider Freddie Mac has been using the option to help both homeowners and build investor confidence.
According to Haldeman Jr., accepting mortgage forbearance is crucial to Freddie Mac as he estimates that currently Freddie Mac owns 25 percent of the total U.S. mortgage market. Freddie is a hybrid government assisted agency that is publicly traded and in need of generating returns for investors. Forbearance is one tool being used to assist those in financial dire straits and keep in-house bookkeeping numbers on point.
How to Get Mortgage Forbearance
Despite the slew of real estate owned property across the nation, mortgage issuers are in the money, not the real estate business. That means lenders are willing to work with consumers to prevent them from becoming a foreclosure statistic. Financially strapped consumers that can prove that their financial hardships are temporary, can begin the forbearance process by contacting the lender’s loss mitigation department directly.
Consumers should be pleasant and diplomatic in the negotiation process. As long as a mortgage holder can prove that the situation is temporary and agrees to the mortgage modification terms designed by the lender, there is a good chance of forbearance being granted. Typically, most lenders will be willing to enter the agreement if the borrower is only 3 or less payments behind.
