What Happens at the End of My Covid-19 CARES Act Mortgage Forbearance?

A New Option from the Consumer Financial Protection Bureau.

On March 27, 2020, in the early days of the Covid-19 pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. A major purpose of this wide-reaching law was to provide assistance to homeowners with federally-backed mortgages. In particular, these homeowners could request a 180-day forbearance of payments, with the option to request an additional 180-day extension. Approximately 70% of U.S. mortgages are federally-backed, and the forbearance program has become very popular, with over five million borrowers having requested a forbearance, as of the date of original publication of this article (October 1, 2020).

A CARES forbearance temporarily prevents payments from coming due, but payments are not forgiven and are all due to the mortgage lender at the end of the forbearance period. This often creates cash crunch when a forbearance comes to an end. The CARES Act itself does not provide additional payment options when a CARES forbearance ends.

The Consumer Financial Protection Bureau (CFPB) has attempted to address this with a new amendment to Regulation X, a federal regulation governing mortgage transactions. See 85 Fed. Reg. 39,062 (June 30, 2020). This new provision allows mortgage servicers to offer those coming out off of a forbearance the option of adding unpaid amounts the end of their loan. If you find yourself at that stage, here are some key points:

  1. Mortgage servicers can offer you favorable repayment options post-forbearance, but they don’t have to, so if you are interested in this, ask them.
  2. Under the new regulation, mortgage servicers can offer you those options without conducting a full loan modification procedure, but if they reject you without collecting a full application or doing a full review, you may have a claim under the Real Estate Settlement Procedures Act.
  3. After a forbearance but before foreclosure, you can file a Chapter 13 bankruptcy and force your mortgage lender to take past-due amounts in installments over three to five years.


If any you are interested in filing a bankruptcy case in Massachusetts or you believe you may have a claim under the Real Estate Settlement Procedures Act, feel free to reach out to us for a free case review.