Are you a homeowner who is behind on their mortgage payments and stressing about it? Well, then, let us assure you that it is time to throw these worries to the side because the mortgage world may have unlocked a powerful tool for you. Fannie Mae and Freddie Mac have introduced a revamped policy that allows people who have missed their mortgage payments to issue and qualify for a deferment.

Want to know what this is about and how it can help you? This article has you covered. Hop on below to learn a detailed guide on the new mortgage policy and how borrowers can help themselves out of situations where they have missed paying their mortgages.

How Does the New Policy Works?

According to a recent regulation introduced by Fannie Mae and Freddie Mac, any eligible borrower can postpone their mortgage payments for 2-6 months at a time. The total of these deferred payments will be added to the end of the mortgage term. As per the new policy, qualified borrowers can accumulate a total of 12 months of deferred payments. However, it's important to note that these payments cannot be deferred continuously for 12 months.

Furthermore, borrowers who receive approval for deferment must wait 12 months before they can request another deferment. For instance, if you defer your mortgage payment in October of this year, you won't be eligible for another deferment until October of the following year. Now that you have a better grasp of how the new policy functions, it's advisable to delve deeper into understanding the concept of mortgage deferment and its workings.

What is Meant by Mortgage Deferment?

The mortgage deferment – also called deferral, lets borrowers move the missed payments on their scheduled mortgage loan to the end of the mortgage term. This means if any borrower was due to pay a specific amount of mortgage this month and under any circumstances couldn’t, instead of deferring it to the next month, the payment will be moved to the end of your mortgage cycle. This means that if your loan payments were supposed to end after three years, your deferred or missed payment would be moved after the last due payment three years later.

However, if you sell, transfer, or refinance your property before your mortgage ends, then an unpaid balance will be established, which will be due at the time of the transaction. Fannie Mae and Freddie Mac's recent rule is noteworthy as it provides a convenient solution for individuals who have fallen behind on their mortgage payments. This rule offers a means to prevent late penalties and foreclosure, enabling them to maintain consistency in their financial obligations..

How is a Deferment Different from Forbearance?

If you are someone who has been paying mortgages for some time now, we are sure you must be aware of a few other terms in the business. If this is the deal, then we are sure you must be thinking that the mortgage deferment looks a lot similar to mortgage forbearance, right?

Well, no! Wrong. Mortgage deferment and forbearance are two entirely different concepts, and we will explain how. The mortgage forbearance lets borrowers pause their mortgage payments until they want to resume it, while the deferment is solely focused on handling payments that have been missed.

In a few cases, the deferment may follow a forbearance plan. However, the scenarios differ from case to case. This can be considered in a way that one person may exit a forbearance plan and then miss out on a couple of payments. In this case, they will still be able to qualify for a deferment. However, they will not have to participate in a forbearance plan when they want to get a deferment.

How Can One Qualify for Mortgage Deferment and Tips on Repaying Your Paused Payments?

Now that you know how the mortgage deferment works and what it is, then it is time to hop on to understand how one can qualify for the mortgage deferment. Well, if this is the same query that was in your mind, then let us answer it for you. One will be eligible for a mortgage deferment if their situation meets the following criteria:

• Fannie Mae or Freddie Mac should back your mortgage.
• Your mortgage should be a conventional first-lien mortgage category loan.
• One should have had their mortgage for at least a year.
• An individual should have missed more than one mortgage payment.
• There should be substantial time left on your mortgage. The loan standing cannot be within 36 months of its maturity or its projected payoff date.
• You should prove that you will be able to pay your mortgage amount in the future.

Repaying your Paused Payments:

When you have decided on getting a mortgage deferment, you should plan for one critical aspect. What is it? Well, the unpaid balance you will have to maintain from the skipped payment will come to you as a one-time balloon payment at the end of the mortgage term. While this deferred balance is not added with interest, one will still have to pay interest on their regular interest-bearing balance.

Hence, any individual needs to plan how they will pay the due bill collected at the end of the cycle beforehand. One trip we can throw at you is that you should come up with a budget that suits you. This will help you be prepared when the bill arrives at the end of the mortgage term.

Wrapping Up!

If you are someone who recently missed out on their mortgage payment due to any reason and heard about the payment policy, which helps you get out of it, and wanted to know more about it, then we hope this article was helpful for you.