How ‘Forbearance' Can Help Save Your Home if Coronavirus Claims Your Job

Thousands of San Francisco Bay Area homeowners face a loss of income amid the COVID-19 pandemic. Acting now can help avoid foreclosure.

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As the coronavirus crisis leads to layoffs and furloughs, many Bay Area families could find themselves unable to pay their mortages.

The good news: if you're afraid you can't meet your next payment, it's possible you have options.

Greg McBride, a chief financial analyst with Bankrate, says mortgage lenders are taking quick steps to help borrowers.

“Now more than ever, lenders are proactively reaching out to customers, letting them know that they will work with them," McBride said. "They have different programs available.”

Some of the nation's biggest banks confirmed that for us. Wells Fargo, JPMorgan Chase Bank and Bank of America told NBC Bay Area they're encouraging concerned customers to pick up the phone.

Following the 2008 financial crisis, many homeowners quietly stopped paying their home loans. That was a mistake, leading to millions of foreclosures nationwide.

How Forbearance Works

Financial experts told NBC Bay Area starting the conversation early puts homeowners on record, and could open the door to "forbearance." That's bank lingo for either a temporary lower monthly payment, or a pause in payments altogether.

Forbearance is traditionally reserved for hardships. That determination is usually made on a case-by-case basis, so we can't tell you the criteria for who gets it. Customers will need to call their lenders to learn more.

McBride said it's important to recognize forbearance is not debt forgiveness.

"You still will have to repay the money," he said. "They basically call a time-out from having to make those monthly payments, if you’re in some form of financial distress."

It's crucial for homeowners to understand early on how and when they will be able to make those reduced or delayed payments. They should ask: are there penalties or fees? Is there added interest?

It's going to get complicated, but you can get through it and save your home. We recommend starting with the U.S. Consumer Financial Protection Bureau's forbearance web page. They take it slow, and it's actually pretty easy to understand.

NBC Bay Area followed up with major mortgage lenders to ask about their policies during the COVID-19 crisis. Their statements are below.

ALLY FINANCIAL: We are taking multiple steps to support our customers, communities and all stakeholders to bolster peace of mind and help safeguard their long-term financial well-being.

Existing mortgage customers will be allowed to defer payment for up to 120 days. No late fees will be charged; interest will accrue.

Ally is committed to supporting customers during this period of economic uncertainty and will work with customers individually to find solutions tailored to their specific needs. To activate these and other forms of relief, customers should contact Ally Home Loans Customer Care at 866-401-4742.

BANK OF AMERICA: We want clients facing a hardship related to coronavirus to call us and let us know they need help.

Clients should call the number on the back of their Bank of America card or go to our website and click on the Contact Us tab.

For consumer and small businesses clients impacted by coronavirus, assistance includes refunds on fees across a variety of products and services, deferred payments, and no negative credit bureau reporting. This includes for deposit accounts, credit cards, mortgages, auto loans, small business loans, and others.

All Bank of America teammates who work with clients are trained to identify and assist impacted clients and provide the right support to address their unique needs.

JPMORGAN CHASE BANK: For Chase Home Lending customers who are concerned about making their mortgage payment due to COVID-19, we ask that they please reach out as soon as possible. We have options available.

WELLS FARGO BANK: We are working on a daily basis to ensure we are putting measures in place to support the needs of our customers impacted by COVID-19 in the most effective ways. Right now, that includes assistance such as fee waivers, payment deferrals, and other expanded assistance for credit card, auto, mortgage, small business and personal lending customers who contact us, and we will continue to communicate with customers as the situation evolves.

Wells Fargo has a number of existing options available to help mortgage customers address short- or longer-term financial changes that may impact their ability to keep up with their monthly mortgage payments and we need to talk with them directly to understand their circumstances and identify the best way to help them.

In addition, we are very pleased with today’s announcements regarding plans to temporarily suspend foreclosures and evictions for customers with loans guaranteed by FHA and the GSEs. Wells Fargo also has temporarily stopped all foreclosure related activity for loans we hold in our portfolio.”

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