Covid relief programs allowed millions of struggling Americans to pause mortgage payments, and many of those bailouts are now expiring, putting cash-strapped borrowers at risk.

“The maximum forbearance term was 18 months for most programs,” said Michael Fratantoni, chief economist of the Mortgage Bankers Association. “And many borrowers are reaching that point now.”     

While many are leaving forbearance programs by tacking those postponed payments onto the end of their loan repayment schedule, borrowers must resume payment to qualify, he said.

However, if homeowners still can’t make payments, they may have other options.  

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“You should definitely talk it over with your servicer,” said Mark McArdle, assistant director of mortgage markets at the Consumer Financial Protection Bureau. “They’re supposed to reach out 30 days before your forbearance ends, and there’s a range of options.”

Borrowers may also speak with a counselor approved by the U.S. Department of Housing and Urban Development for independent guidance, he suggested.

If borrowers have income but can’t afford their old payment amount, they may qualify for a loan modification, which adjusts the mortgage to lower monthly payments.

“If you expect to have difficulty making a payment, reach out to your servicer immediately,” Fratantoni said. “The sooner you get in contact with your mortgage lender, the more options you will have.”

For example, servicers may extend the loan term or reduce interest rates to lower payments, depending on the type of loan and borrower’s situation.

Homeowners can learn more about post-forbearance options by loan type through the Consumer Financial Protection Bureau, which may prepare them for speaking with their servicer.

With home prices up by almost 20% compared to the previous year, borrowers with long-term job loss or a shuttered business may consider selling their property. 

Some 87% of borrowers in foreclosure have positive equity, according to RealtyTrac, a foreclosure database, meaning their property is worth more than their mortgage balance.

In many cases, sellers may offload their homes quickly due to high market demand and walk away with cash, Fratantoni said.  

“That can be a transition cushion for those who have no income and no prospects,” McArdle added. 

If a loan modification doesn’t work, borrowers may explore the Homeowner Assistance Fund, a nearly $10 billion program created by the American Rescue Plan.

The U.S. Department of Treasury is currently reviewing each state’s plan, McArdle said, and programs may be running by the end of the first quarter in 2022.  

While each program is different, many will have options to help borrowers catch up on missed payments, he said, making it easier for servicers to offer solutions. 

“That will be another great tool for folks to look at,” McArdle said. “Especially for those who have exhausted everything else.” 

Borrowers can find their state’s program through a map from the National Council of State Housing Agencies.