Generate a Mortgage Forbearance Request Letter with This Free Tool

Last updated on December 28th, 2020

You may (or may not) have heard that the CARES Act is allowing a huge chunk of homeowners to request forbearance for six to 12 months of mortgage payments.

If you haven’t heard, you can review the details here, but the takeaway is that anyone with a federally-backed mortgage who has been economically affected by COVID-19 is eligible.

And like other mortgage relief programs that have been rolled out by various private banks and state governors, the forbearance won’t hurt your credit score/history, nor will you pay penalties or fees.

It’s still somewhat unclear what happens after the forbearance period ends, but the CARES Act did stipulate that you can’t be charged interest beyond what would have been due had you remained current on your loan.

For me, that means the missed mortgage payments get added to the end of the loan term, effectively putting the mortgage on hold.

But that’s just my opinion, and the whole thing is still a bit fluid and confusing. Even the experts are trying to make sense of it all.

Another key point is that you don’t need to provide any documentation of hardship to receive the forbearance.

You simply need to attest to your loan servicer that you’re experiencing a financial hardship due to the COVID-19, and request relief.

[How long will you have to wait to get a mortgage after forbearance?]

Hello Lender Generates Free Mortgage Forbearance Request Letters

  • Free tool generates a letter to send your loan servicer for mortgage assistance
  • Simply answer a handful of questions and it does the rest
  • You will receive an email with the letter in Microsoft Word format
  • That letter can then be sent on to your loan servicer to request forbearance

To make that piece a little easier than it already appears to be, the tech arm of law firm Wilson Sonsini Goodrich & Rosati, SixFifty, has launched a new free tool called “Hello Lender.”

It generates a letter (in Microsoft Word format) to your loan servicer by asking you a series of simple questions.

You can then use that letter to send to your loan servicer, who in turn should provide you with the desired relief outlined in the letter, without further proof of hardship.

Just note that your loan must be federally-backed, and you must send it to your loan servicer, which may not be the bank that originally funded your loan.

Assuming you get those details right and qualify based on loan type, you should be good to go.

I generated a test letter and it look about a minute to complete it.

[What’s the Last Day to Apply for Mortgage Forbearance?]

Sample Mortgage Forbearance Letter

forbearance letter

It asks a few basic questions, such as your name, your bank/loan servicer’s name, your loan number (if you have it handy), your property address, and the amount of forbearance you’d like to receive.

You can pick anywhere from 30 to 180 days, and it automatically adds a line about the ability to request an additional 180 days of forbearance, or the ability to shorten the forbearance period at your request.

Additionally, it includes language from the CARES Act that you “attest and affirm” that you’ve experienced a financial hardship related to COVID-19, and fees, penalties, and interest won’t be charged beyond what had been if on-time payments were made.

It’s pretty straightforward, but might be helpful to some folks who are totally confused by all this.

I don’t blame anyone, considering the many mortgage relief efforts being touted by individual banks and states, which has probably done more harm than good.

CARES Act Mortgage Relief Might Be Best Path for Most Homeowners

  • CARES Act mortgage relief provides the longest amount of forbearance
    (12 months)
  • With the least amount of documentation necessary (basically a letter)
  • Applies to most loans, including Fannie/Freddie/FHA/USDA/VA
  • Those with jumbo loans or portfolio loans must speak to their bank or loan servicer directly

The CARES Act mortgage relief is probably the main and go-to program at this point for most individuals, since the majority of homeowners with a mortgage have a federally-backed one.

To reiterate, federally-backed includes loans backed by Fannie Mae and Freddie Mac, along with the FHA, USDA, and VA, which should cover roughly two-thirds of the market.

The rest are jumbo loans or portfolio loans, both of which might be on individual bank’s books. In those cases, you’d need to inquire about relief with those entities directly.

Lastly, remember that if you can pay your mortgage, you should pay it. In other words, if you haven’t been affected financially, you shouldn’t just take advantage of the “free mortgage payments” because you can.

That’s the message from FHFA director Mark Calabria and Treasury Secretary Steven Mnuchin.

Read more: How is mortgage forbearance paid back?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.


Nearly 3 Million Homeowners Already Receiving Mortgage Forbearance

Last updated on April 24th, 2020

We’re now getting more information on just how many Americans might be receiving mortgage relief due to the crippling effects of coronavirus.

It’s only been a couple weeks since mortgage forbearance programs were officially launched, including the relief that’s part of the CARES Act, which allows homeowners to pause six to 12 mortgage payments.

And so far, it appears a lot of homeowners are reaching out to their loan servicers to get assistance.

Part of that might have to do with the fact that you only need so much as a mortgage forbearance letter to take part.

2.9+ Million Borrowers in Mortgage Forbearance Plans

active forbearance

  • 5.5% of outstanding mortgages are in a forbearance plan
  • This is well above FHFA director’s predictions earlier this month
  • If numbers keep rising it could be devastating for loan servicers
  • Higher percentage of FHA/VA loans affected than Fannie/Freddie loans

Data analytics company Black Knight has launched its own mortgage forbearance data report known as the “McDash Flash Forbearance Report” in light of the unprecedented crisis.

As of April 16th, more than 2.9 million homeowners “have entered into COVID-19 mortgage forbearance plans,” which represents 5.5% of all outstanding mortgages.

This is a lot higher than what FHFA director Mark Calabria predicted back in early April, when he said there’d only be 700,000 missed payments for the overall market in April.

We are already at over four times that if the extrapolated data from Black Knight’s sample set of loans is accurate.

And it’s probably just going to get worse as the month moves along and more homeowners either realize they can forbear mortgage payments, or finally get through to their loan servicers.

What Calabria was right about was the mix of forbearance requests, which have slanted toward government home loans such as FHA loans and VA loans.

These three million odd borrowers cover 4.9% of all GSE-backed loans and 7.6% of FHA/VA loans.

Collectively, this population of homeowners in forbearance represents $651 billion in unpaid principal.

It would take mortgage servicers a whopping $2.3 billion of principal and interest payments per month to make good with their investors.

This has sparked fears of some big-name failures if servicers don’t get access to some sort of liquidity backstop other than the one rolled out by Ginnie Mae.

Regarding private-label mortgages that are portfolio-held or securitized, loan servicers or banks will lose $1.1 billion per month due to loans in forbearance.

Altogether, it’s a $3.6 billion monthly price tag to hand out forbearance.

Fannie Mae and Freddie Mac Have the Most Loans in Forbearance

monthly advances

  • Nearly 1.4 million Fannie/Freddie loans in mortgage forbearance
  • Over 900k FHA/VA loans in forbearance plans
  • 615,000 private-label or portfolio loans receiving forbearance
  • Expect all these numbers to continue rising in coming weeks/months

While the highest percentage of loans in forbearance belongs to Ginnie Mae (FHA/VA loans), Fannie Mae and Freddie Mac have the most loans in forbearance.

And that matters because unlike Ginnie Mae, there is nothing in place (yet) to advance funds to companies that service Fannie/Freddie-backed home loans.

Through mid-April, some 1,374,000 home loans backed by the pair were in mortgage forbearance plans related to COVID-19.

When you take the aggregate missed PITI payment into account, these servicers, some of which are nonbanks, are on the hook for $1.5 billion a month.

This number is only expected to rise over time, as noted.

Meanwhile, estimated monthly advances for FHA/VA loans are roughly $800 million, and also rising. But as I said, they’ve got a system in place to assist servicers.

As for the portfolio-held home loans and private-label securities, that’s another $1.1 billion servicers/banks will need to come up with monthly.

In other words, mortgage forbearance is very, very expensive, especially if it lasts a full 12 months.

And for those who are already taking part, I don’t see why most would stop short of the full relief period voluntarily, especially if the economy doesn’t return to normal anytime soon.

Update: As of April 23rd, more than 3.4 million homeowners, or 6.4% of all mortgages, were in a COVID-19 mortgage forbearance plan.

That’s 5.6% of all Fannie/Freddie loans and 8.9% of all FHA/VA loans.

Read more: How is mortgage forbearance repaid?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.


FHFA announces further extension of COVID-related mortgage relief

The Federal Housing Finance Agency is providing an additional three months of forbearance to borrowers with loans backed by Fannie Mae and Freddie Mac, totaling 18 months of relief due to the coronavirus pandemic.

The FHFA said Thursday that it was aligning its policies with the Biden administration to address economic burdens for homeowners due to COVID-19. The change comes nearly three weeks after the agency extended the total forbearance period to 15 months.

When Congress passed the Coronavirus Aid, Relief and Economic Security Act last year, it allowed borrowers with federally backed mortgages to request up to 12 months of forbearance — divided into two 180-day increments — if they experienced financial hardship.

In forbearance, a borrower is allowed to suspend payments by extending the loan’s terms. There is no set cutoff date for the 18-month forbearance period because borrowers have entered and exited forbearance at different times.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said.

Bloomberg News

The FHFA also said Thursday that it was extending a moratorium on foreclosures and real estate-owned evictions until June 30 for loans backed by Fannie and Freddie. Because housing prices have jumped dramatically, borrowers are more likely to be able to sell their homes than go into foreclosure than in financial crisis in 2008, when many were underwater on their mortgages.

The foreclosure moratorium had been set to expire on March 31, but the FHFA is offering another three-month extension only for single-family mortgages backed by the government-sponsored enterprises. The REO eviction moratorium applies to properties acquired by the GSEs through foreclosures or deed-in-lieu transactions.

Earlier this month, the Biden administration announced similar extensions of relief for loans backed by the Federal Housing Administration, Department of Veterans Affairs and Department of Agriculture.

“Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government,” FHFA Director Mark Calabria said in a press release. “Borrowers and the housing finance market alike can benefit during the pandemic from the consistent treatment of mortgages regardless of who owns or backs them.”

Roughly 2.6 million homeowners were in forbearance plans as of Feb. 14, representing 5.29% of loans serviced, the Mortgage Bankers Association said Monday.

The share of Fannie- and Freddie-backed loans in forbearance fell slightly to 2.97% last week, from 3.01% on Feb. 8, the MBA said. By comparison, 5.22% of all loans serviced are currently in forbearance plans, the MBA said.


FHFA extends forbearance period to 18 months

Borrowers with mortgages backed by Fannie Mae and Freddie Mac may be eligible for an additional forbearance extension of up to six months, the Federal Housing Finance Agency announced Thursday.

On Feb. 9, the FHFA extended forbearance plans an additional three months past beyond their initial 12 month expiration. With the latest edict, the agency is now allowing borrowers up to 18 months of coverage.

According to the FHFA, eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, 2021. The FHFA said other limits may apply to the extension but did not provide further details.

With the new extension set in motion, some borrowers may now be in forbearance through Aug. 31, 2022.

The FHFA extended its multifamily forbearance policies in December, pushing forbearance options for multifamily mortgages backed by the GSEs to March 31, 2021, though the agency has yet to say whether the latest extension will also be offered to owners of multifamily properties.

From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

Presented by: FICS

Alongside its forbearance announcement, the FHFA also said the GSEs will be extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions through June 30, 2021 – three months past the previous deadline set for Mar. 31, 2021. The new date matches the moratorium set by HUD for FHA and USDA loans.

According to FHFA director Mark Calabria, borrowers and the capital markets investors both benefit from consistent treatment.

“From the start of the pandemic, FHFA has worked to keep families safe and in their home, while ensuring the mortgage market functions as efficiently as possible,” Calabria said in a statement Thursday. “Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”

As of Feb. 22, the Mortgage Bankers Association estimates 2.6 million homeowners are in some form of forbearance. The MBA reported on Monday that the portfolios of Fannie Mae and Freddie Mac dipped down to 2.97%. The GSEs have consistently had lower forbearance rates than other owners of mortgages during the pandemic.

Economic data is starting to show some of the effects of long-term moratoriums. Black Knight’s December mortgage monitor report revealed that foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums protected homeowners.

According to Black Knight, recent forbearance and foreclosure moratorium extensions have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period.

Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021, when the first wave of plans reaches their 12-month expirations.