I’ve been a real estate broker in Orlando for the past 16 years and in that time I’ve never seen the economy come to a screeching halt like this before. Not even when the market crashed back in 2008 and the market was suddenly flooded with Orlando short sale properties that weren’t selling.
This pandemic is a different kind of disaster that has nothing to do with unethical mortgage companies or homeowners living well above their means. This is a situation that took us all by surprise and is out of our control as homeowners. Luckily, there is help out there for homeowners who are currently in financial trouble.
Orlando homeowners who’ve lost their job because of COVID-19 are getting some help with their mortgage. Depending on the situation they’re in, they should be eligible to have their mortgage payments suspended or reduced for anywhere between 3 and 12 months.
Our Federal directors, with the help of Freddie Mac and Fannie Mae, are instructing lenders to help homeowners out by offering flexibility. This would cover about 50% of all the home loans in the U.S. [loans that are guaranteed by Freddie and Fannie]. Regulators believe, however, that the mortgage industry adopts a similar policy with their customers.
Under this new plan, homeowners who lost their income could qualify for reduced payments or a pause to the payments altogether. This forbearance can be for up to 12 months depending on the homeowner’s situation.
Homeowners should not just stop paying their mortgage without contacting their mortgage company. Doing this will surely damage their credit. Their lender will work with them to at least suspend 3 months of payments right off the bat without any penalties and without reporting it to any credit bureau. They will do this with verbal testimony without any supporting documentation because of the coronavirus outbreak.
Within the 3 months, they should work with you to come up with a payment plan and may ask you for some proof of hardship to determine what your best options would be to get back on track.
COVID-19 mortgage help is not FREE MONEY!
You must know that help with your mortgage due to COVID-19 doesn’t mean free money. All homeowners will have to work out a repayment plan once they are back on track financially. This could also be simply extending the term of the loan.
Some may even have to repay the entire amount when the 90 days are up, depending on the banks’ criteria as well as the homeowner’s financial situation.
I believe this was a great 1st step by lenders. Could you imagine the mass panic throughout the US if, all of a sudden, homeowners couldn’t continue to make payments and all the lenders began foreclosure proceedings?!
There’s already enough stress about trying to not get the virus and keeping our loved ones safe and healthy that people should not have to worry about losing their homes.
Contact your mortgage lender
Homeowners needing help should reach out to their servicer immediately and find out what their options are. Explain to them that you are having financial problems because of the virus outbreak and request to be put into a forbearance program.
Some of the largest mortgage lenders in the country, like Wells Fargo and Chase, are also working to help homeowners who have been financially hurt by the coronavirus. These lenders have the responsibility to follow through on what our government directed them to do.
Mortgage companies have also been told to pause all foreclosure proceedings as well, although anyone in foreclosure right now would have had to be in trouble before the coronavirus even started spreading in the U.S. I believe this was more of a public health move than anything else.
Can a mortgage forbearance end up as a short sale?
Once a mortgage forbearance agreement has come to an end, there is still a chance that you don’t like the terms, or you still can’t afford what they’re offering. In this case, traditional loss mitigation procedures may resume. At this point, the usual options will be available to you like a short sale, loan modification, or a deed in lieu. Homeowners may feel that one of these options will benefit them more than agreeing to the terms they have laid out for you in the forbearance program.
Help for renters
These plans by mortgage companies don’t do anything to help renters. Renters, however, can apply for rental assistance through state and federally funded rental assistance programs. I would also suggest reaching out to your landlord and maintaining open lines of communication.
Landlords feeling the pain
Keep in mind, landlords are suffering as much and even more right now. Mortgage forbearance programs are designed for people’s homestead properties and not investment homes. Imagine you have 10 rental properties, 10 mortgages to pay… then, all of a sudden, you stop receiving 10 rental checks all at once!