Number Of Homeowners Halting Mortgage Payments Jumps Over 1K Percent, Some Banks Expect To Be Repaid Quickly

SANTA CLARITA (CBSLA) — Over the last month, the number of American mortgages in forbearance — meaning the homeowners have arranged with their bank to stop paying their mortgage — has jumped more than 1000 percent.

One homeowner, who chose to be identified only as Renee, applied and received a forbearance on her Santa Clarita home from her lender U.S. Bank due to her husband being out of work.

"So, I thought, 'Ok if we can go a couple of months grace then I could save up to pay our bills for the months that he's not working.'"

Renee said she was shocked after receiving a letter in the mail with the terms of her forbearance.

"That I would have to pay the full six months of the mortgage by September 2020," she said. "And if you haven't paid or are unable to pay that full lump sum at that point, they'll be able to pursue foreclosure."

There are three scenarios that homeowners will face when their forbearance expires:

• Payments could be due immediately in one large balloon payment.
• Homeowners can receive a payment reduction and can pay back their missed payments over the next year along with their monthly payment.
• Receiving a loan modification.

Devon Thorsby, a real estate editor at U.S. News and World Report, said homeowners need to know what they are getting into when they apply for forbearance.

"You should expect to go in there and negotiate a little bit. See what is possible for them, and explain your situation honestly to them as well," said Thorsby. "They are not necessarily going to modify every single person's loan."

Renee said she did ask her bank about a loan modification after she received the letter.

"She said it would change the terms of your loan, and your interest rate," Renee said.

She then decided to cancel her forbearance due to the fact that she would have to pay close to $20 thousand at the end of it all.

"There is no way I can come up with that amount," she said.

The CARES Act specifies that a forbearance won't affect your credit, but homeowners should check their credit report often to make sure their lenders follow the order.