Mortgage payment forbearance is a lifeline for homeowners who can’t pay their mortgage right now, but a surprisingly high percentage of borrowers who applied for and got forbearance say they didn’t need it.
Nationwide, 80% of homeowners who applied for forbearance under the CARES act were approved for it, buying at least three months of deferred mortgage payments.
A LendingTree survey of a small sample of 1,000 mortgage holders who are in forbearance found that only 5% of those approved for forbearance said they wouldn’t have been able to pay their mortgage without it. Another 26% said they could have paid the mortgage, but would have had to skip other bills.
If its survey results are representative, that means nearly 70% of those in forbearance didn’t need the help. So why take it?
“The main reason that those almost 70% who said they applied for forbearance anyway said they just wanted a break from their monthly payment,” Brianna Wright at LendingTree told WTOP.
How do they feel about that?
“There was definitely a level of guilt. We found about a third felt really, really guilty about it and another 38% felt a little bad about it. I think that’s because asking for help definitely isn’t easy and there can be a level of shame or embarrassment associated with it, even when you need the help. So that is going to be amplified when deep down you know you didn’t really need that forbearance,” Wright said.
The highest percentage of mortgage holders in the survey who took forbearance were in the highest sampled household income level of $100,000 or more at 34.5%.
Under the CARES Act, many borrowers were not required to provide any proof that they were suffering a financial hardship due to the coronavirus pandemic.
The CARES Act also prohibits from mortgage servicers from reporting missed payments, but LendingTree says any borrower in a forbearance program would be wise to watch their credit report closely.
“Lenders aren’t supposed to report loans in forbearance as a missed payment. But there is definitely a chance that they may accidentally report a payment as missed or late while the loan is in forbearance,”
LendingTree has a coronavirus resource hub online with information and FAQs on different coronavirus relief programs.