Mortgage Forbearance Could Help Struggling Homeowners Avoid Foreclosure, But Many 'Aren't Aware Of This Option'

CHICAGO (CBS) -- Forbearance. It's a big, scary word that's the solution right now to foreclosure. Sound like a lot of paperwork? CBS 2 Morning Insider Lauren Victory shows us forbearance is not as complicated as it sounds.

"A lot of homeowners aren't aware of this option," said Matt Hulstein, staff attorney at non-profit Chicago Volunteer Legal Services.

That's Hulstein is begging property owners to listen up. COVID-19 has shuttered businesses in our area. He's afraid of the boards we could see over houses, too.

"It has the potential of helping millions of homeowners get through this really tough time," Hulstein said.

He's talking about something called forbearance. You can hit pause on your mortgage for up to six months, and pay it back later with no interest and no fees.

The federal COVID-19 stimulus plan passed in March made forbearance a reality for people with federally-backed mortgages. That's three-quarters of all homeowners.

"It's as simple as one call to your servicer," Hulstein said.

The alternative is much more complicated to entangle. Falling behind on a mortgage can lead to foreclosure, and already the nation is not trending in the right direction.

"In the U.S., the delinquency rate in March was 3.6%. It jumped to 6.1% in April," said Frank Nothaft, chief economist at CoreLogic, a real estate technology and data analytics company.

It's worse in Chicago, at 6.6%, and likely to increase, according to Nothaft.

"The Mortage Bankers' Association has put out some statistics," he said. "About 8% of all home mortgages in the United States have requested forbearance."

Chicagoans are apparently among the interested.

"We've had a lot of visits to our website," Hulstein said.

Chicago Volunteer Legal Services has created a special page with COVID-19 relief information.

Hulstein warned forbearance isn't perfect; heirs to a property can't get help unless they're on the title.

"The family of that borrower might reach out to the bank, but the bank will not talk to them, because in the bank's mind, these are strangers to the account," he said.

That's a fight for another day.

Experts say it's better to look into this option before falling behind on bills. Forbearance is available for reverse mortgages as well.