In discussing the new forbearance program that Freddie Mac and Fannie Mae created to assist unemployed homeowners, I have discussed how the program could indeed offer assistance to many of those who are seeking foreclosure help. However, it is important for people considering participating in these programs to understand two of the larger consequences associated with the temporary reprieve a forbearance provides.
As I mentioned on Wednesday, your overall unpaid balance on your mortgage will only continue to increase during your forbearance period. While you may be spared from foreclosure, interest will continue to accrue on the total balance. This can offer many later complications for households with additional debt, such as credit cards or medical bills.
Furthermore, it is also important to remember that even with a forbearance program in place, your lender can still report your mortgage as delinquent. This can adversely affect your credit, and you should ask your lender what their specific policy is beforehand. A Chapter 7 bankruptcy may only delay your foreclosure, but filing Chapter 13 bankruptcy could help you keep your house as well as get a handle on your finances.
It is understandable that many people can be tempted to ignore later drawbacks when picking a program that promises immediate benefits. I want to implore more struggling homeowners to take every circumstance into consideration. If your goal is to keep your family in your home, what you decide now can help ensure you are not in the exact same situation six or 12 months from now.
Law Firm of Kevin D. Judd – Maryland bankruptcy lawyer