Did you participate in government COVID loan modification (sometimes called ‘forbearance’) provisions? If you did and if you’re planning on selling your home, it may be a good idea to review the current state of your home loan. Some folks are finding that their loans were changed in ways that they weren’t expecting creating an incomplete picture of where they stand.
In some cases, people are finding that the delayed payments (plus interest and fees) have accumulated in what amounts to a second mortgage. Payments are often not required to be made on these balances, so there may not be a monthly (or even annual) statement sent to the homeowner and they’re not always reflected in the payoff amount that they see on the monthly statement they do get. As a result, people may be overestimating the equity they have in their home since they may be unaware the forbearance portion of their home loan. This is catching people by surprise when they go to sell or refinance their home, and agents, lenders and attorneys are sent scrambling to figure it out.
If you did enter into a loan modification arrangement during COVID, it may be wise to make sure you have a complete picture of where you stand. If you are selling, it’s also a good idea to be up front with your agent about any changes made to your loans since you bought your home, as these things are easier to figure out the sooner they’re known.
If you’re unsure about the status of your loans and need help, please don’t hesitate to reach out. We have experience with this and we have great lenders, title folks and others on our side to help you understand and navigate it.
