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Vast Majority of Forbearances Going to Those Who Don't Need Them
Wednesday, May 20, 2020
With the number of homeowners under forbearance plans nearing
10 percent of all of those having a mortgage, a Lending Tree survey indicates
that most of those borrowers did not actually need the help. One quarter of the
homeowners surveyed by the company said they had applied for forbearance
because of a COVID-19 hardship, and of those, 80 percent were granted one.
However, only 5 percent said they wouldn't have been able to pay their mortgage
without forbearance. Lending Tree says that lenders typically require borrowers to prove they're
experiencing a financial hardship in order to qualify for forbearance. However,
the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by
Congress lets homeowners with government-backed loans apply for forbearance
without having to prove a hardship. This helps explain why so many people were
able to get a forbearance even though they didn't necessarily need one.
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