Mortgage Forbearance: What to Know
What do you do when financial hardship hits and you can't make your monthly mortgage payments? This is a question on many homeowner's minds as nearly 17.8 million Americans are reportedly unemployed during the coronavirus pandemic.
When homeowners face financial hardship, such as the loss of a job, they often look to obtain a forbearance agreement from their lender. A forbearance happens when your lender grants you a temporary pause or reduction in monthly payments on your mortgage. Forbearance is not the same as payment forgiveness, in that you still have to pay the entire amount back by an agreed-upon time.
Mortgage lending institutions differ on their mortgage relief policies and qualifications; however, the Coronavirus Aid, Relief, and Economic Security (CARES) Act were signed into law in late March of this year to protect government-backed mortgages.
Federally backed mortgages include:
- Fannie Mae
- Freddie Mac
- The Federal Housing Administration (FHA)
- The US Department of Veteran Affairs (VA)
- The US Department of Agriculture (USDA)
Under the CARES Act, homeowners with a federally backed loan who either directly or indirectly suffer financial hardship due to coronavirus automatically qualify for mortgage forbearance.
Even if your mortgage is not secured by one of these agencies, you still can call and see if you qualify, as many lenders will still offer the option in order to avoid foreclosures.
Under the CARES act, homeowners can claim mortgage forbearance due to financial hardship from COVID-19 for up to 12 months without requiring any documentation or verification. During the forbearance period, mortgage lenders cannot charge late fees or penalties.
Additionally, as long as your mortgage is current at the time you claim forbearance, the lender is required to keep reporting your mortgage as paid current throughout the entire period.
At the end of the forbearance, the CARES act protects consumers from having to make a lump sum payment. Instead, you will be given a repayment plan from your provider. Since repayment options vary, it's important you ask your provider about all of your repayment options.
Possible Repayment Options:
You may be eligible for a loan modification at the end of your forbearance. With modification, the mortgage terms are changed in order to add payments that were missed during the forbearance onto the end of the loan, extending the term.
Another option that may work for some is a reduced payment option. This allows you to keep paying monthly payments at a reduced amount. The amount missed is usually added back into the monthly payments at the end of the forbearance.
Regular payment: $1000 per month
Reduced payment: $500 per month
Payment after forbearance period: $1500 (until caught up)
Balloon payments, or lump sum payments at the end of the forbearance, are prohibited under the CARES Act. However, mortgage lenders may require homeowners who are not protected under the CARES Act to make a balloon payment at the end, so again it is best to check first with your provider.
Mortgage forbearance should only be considered in true financial hardship. In other words, just because of the pandemic, you should not take a forbearance on your mortgage if you can still afford your payments. Likewise, if you are able to start making payments before the forbearance period is up, it's best to do so as soon as possible.
The Next Steps:
Before you get in touch with your mortgage servicer, save time by gathering as much documentation about the mortgage as you can. Also, be ready to list your income and monthly expenses. Due to an influx in calls, financial institutions are experiencing extremely long wait times right now, and having your information at the ready will help.
Have questions ready to ask. Here are some questions you should be asking:
- What fees are associated with the forbearance?
- What are all the repayment options available to you at the end of the forbearance?
- Will you be charged interest during the forbearance period?
If your forbearance is approved, make sure to keep all documentation pertaining to it. Make sure to cancel any automatic payments to the mortgage during the forbearance period, and keep tabs on your credit report to make sure your lender doesn't report the loan as unpaid.
For more information on forbearance, contact your lender and discuss your options. If you need more assistance with understanding your options, you can contact a local agent for the housing counseling agency, or call their hotline at 1-800-569-4287.
Looking for a job? In addition to encountering those annoying never-ending job interviews you may find yourself face-to-face with an artificial intelligence bot.
Companies worldwide increasingly use artificial intelligence tools and analytics in employment decision-making – from parsing through resumes and screening candidates to automated assessments and digital interviews. But recent studies claim that AI does more harm than good.
While AI screening tools were developed to save companies time and money, they’ve been criticized for placing women and people of color at a disadvantage. The problem is that many companies lack appreciable diversity in their data set, making it impossible for an algorithm to know how people from underrepresented groups have performed in the past. As a result, the algorithm will be biased toward the data available and compare future candidates to that archetype.
The City’s Automated Employment Decision Tools (AEDT) law is designed to offset the potential misuse of AI and protect job candidates against discrimination. It was enforced on July 5th, 2023 in New York City - with other cities and states expected to gradually follow suit. Employers must now inform applicants when and how they encounter AI. Furthermore, companies have to commission a third-party audit of the AI software used, and publish a summary of the results to prove that their systems aren’t racist or sexist. Job applicants are able to request information regarding what data is collected and analyzed by the AI. Violations of the law can result in fines of up to $1,500.
Replacing Human Hiring Decisions
However, should a job applicant want to opt-out of such impersonal judgement by a bot, the new law's scope is quite limited.
While the law specifies that instructions for requesting an alternative selection process must be included in the AI screening disclosure, companies aren't actually required to use other screening methods. Not to mention that the law only applies to AI in hiring and not any other employment decisions. It also wouldn't apply if the AI, for example, flags candidates with relevant experience, but a human then reviews all applications, making the ultimate hiring decision.
Some civil rights advocates and public interest groups argue that the law isn’t extensive enough and that it’s even unenforceable. On the other hand, businesses say that it’s impractical, costly, and burdensome, and that independent audits aren’t feasible.
Responsible use of AI in hiring
Although this law may be a good first attempt to assign more regulatory guardrails around AI, it remains to be seen if it ensures the responsible use of AI in hiring processes. At the end of the day, perhaps recruiting talent should remain a human-made decision.
The good news is that AI can help companies without harming potential job candidates in many ways – such as connecting new employees with internal organizational information and company benefits during onboarding. Or helping employees to do their jobs more effectively rather than replacing them.
There’s all this talk about solo travel. And for good reason — no wasting precious time waiting for others to get their act together, take the plans out of the group chat and actually buy the tickets. Going solo, you can be spontaneous. You can plan your trips according to your precise tastes. You can hop on any flight and fly awayyyyyy.
But what if each time you flew you’d get a free ticket? That’s what you get with the Southwest Companion Pass.
Award status, upgrades, lounge access — there are many perks in the frequent flier game. But one of the coveted holy grails is the Southwest Companion Pass.
What is the Southwest Companion Pass?
The Companion Pass is part of Southwest’s Rapid Rewards program. You get to choose one person to be your “companion,” and they fly with you for free (plus some taxes and fees) on every flight. That’s right. Two for the price of one. That’s half off each ticket if you split it! Whether you’re flying with a partner, family member, friend, or anyone else, they can tag along for free.
And it gets better: once you earn the pass, you can reap the rewards for that full calendar year … AND the next. That’s why people go mad trying to earn a companion pass during the early months of the year. The sooner you qualify, the longer you can use it.
There are also no blackout dates. There are no limits. And if you didn’t purchase the ticket (think: work travel, your companion, or a generous benefactor), there are no restrictions! As long as you’re the one on the plane, your companion can also … be on the plane.
You can also switch out your designated companion 3x a year. So, no need to stay in a relationship simply to get the most out of your companion pass! Ghost and fly away — with a whole new companion!
If this sounds too good to be true — it’s not. But there is one small catch. It’s kinda tough to earn this mega reward.
How to qualify for the Southwest Companion Pass?
You can qualify for the pass in one of two ways:
- Fly 100 qualifying one-way flights
- Earn 135,000 qualifying points in a calendar year.
Clearly, this is no small feat — especially if you’re trying to qualify ASAP.
So how do you actually earn the Southwest Companion Pass?
Don’t worry, there’s a path to earning this amazing reward without climbing on 100 flights or spending an exorbitant amount of money.
Earning 135K reward points may seem completely impossible, but it’s easier than it sounds. Simply sign up for a Southwest Credit Card and turn those spending habits into a rapid rewards account. Through the Rewards Priority Credit Card, earn points when using local transit and commuting, plus score major points and miles whenever you spend.
Stay with me here. This is not some scheme to get you into credit card debt. Many airline cards come with potential savings, giantic rewards, awarding you points, and cashback with every purchase you make that can be redeemed for travel. And often they can come with passive sign-up bonuses. If you spend a specific amount of money within a certain timeframe of opening the card, you can be in for a windfall of points.
Now that’s where the companion pass comes in:
- Southwest Rapid Rewards Premier
- Southwest Rapid Rewards Plus Credit Card
- Southwest Priority Credit Card
- Southwest Rapid Rewards Premier Business Credit Card
- Southwest Performance Business Credit Card
Southwest has three personal cards and a business card. Each of these cards offers rewards between 30K-80K points. In the past, people could open two cards and get a bonus that granted enough points to almost meet the minimum. However, with new restrictions on personal cards, you can only get one bonus every 24 months. Boo!
However, this doesn’t apply to business cards. If you’re eligible, have good credit, and not likely to spiral into insane credit card debt, you can open a business card and a personal card, and accrue 100K+ points. The Rapid Rewards Priority Credit Card will get you points after you spend money in no time.
Now to earn the rest of them.
The secret to gaining these credit card points is to plan your card sign-ups around big purchases. Just before a recent move, I opened a card . . . and the rewards came rolling in — a small balm to ease the pain of how exorbitant moving can be.
Put everyday spend — especially big purchases or bulk items — on your Southwest credit card and watch your award points quickly add up. Typically, you earn 1 point per $1 spent on your Southwest card and 2 points per $1 on actual Southwest purchases.
But there are other ways to earn points, including:
- Flying Southwest: Booking travel on Southwest earns more points. The cost of this travel will be worth it with your companion pass
- Shopping from Rapid Rewards Partners: Purchases with Southwest’s “Home & Lifestyle” and “Shop and Dine” Partners also earn Companion Pass qualifying points. While you shouldn’t make gratuitous purchases, browse Southwest’s partners to see if you could earn extra points for items you'd be purchasing anyway. All this, simply from enrolling in their Dining Program and shopping with their partners.
So there you have it! And since it’s almost Spring, get to earning and soon you’ll be flying two for the price of one!