A recent article from the Washington Post indicated that borrowers were offered 90 days of forbearance (instead of the 180 days mandated by the CARES act), and — here’s where the misinformation comes in — lenders told distressed borrowers that past-due mortgage payments would need to be paid in a lump sum once the forbearance ended.
The problem is – if a borrower is asking for mortgage forbearance, it means they cannot make their monthly payments now. In that case, how can a mortgage company expect the same borrower to make four months’ payments at once down the road?
In this training video, Dr. Nitin Chhoda educates you about critical mortgage forbearance items you need to know, including:
1. Your Rights under the CARES Act.
2. Why you should NEVER be forced into ‘lump sum’ payments and how to NEGOTIATE THE BEST PAYBACK TERMS (end of loan extension).
3. How to demand (and get) CARES act mandated forbearance for 180 days (or more) instead of the bank’s ‘default / legacy’ forbearance program.
To help with this effort, the Consumer Financial Protection Bureau and the Conference of State Bank Supervisors have put together a coronavirus-related “Consumer Relief Guide.”
Kathleen Kraninger, the director of the Consumer Financial Protection Bureau, acknowledged in a news call that homeowners weren’t given the correct information.
“One of the challenges early on with respect to forbearance was the concern about what happens after the deferral period,” Kraninger said. “A number of servicers were telling consumers that they would be required to pay a lump sum of the payments that were deferred after the forbearance period. … That is not the case.”
Kraninger said mortgage servicers who are handling federally backed loans have been given updated scripts (available here) to assure borrowers with loans covered by the Cares Act that they have a number of payment options once the deferral period ends.
FOR LENDERS – This script is a guide you can use in your forbearance discussions with homeowners impacted by COVID-19.