One facet of forbearance that Santa-Donato says is little known is the potential temporary inability to refinance a home loan afterwards. While suspending mortgage payments avoids “delinquency in the eyes of credit reporting agencies,” it does count as a “gap in payment from an underwriting standpoint,” he says.
If a borrower misses two consecutive payments on a government-backed mortgage in the span of 12 months, he or she would be ineligible for a loan refinance for a year, says Santa-Donato.
“I had to clarify this with some of the underwriting experts on our side,” he says. “That’s something that I haven’t heard spoken about at all as a particular downside to forbearance.””
