How The New Law And The CARES Law Will Affect Mortgages On Your Home During The COVID-19 Pandemic
Many homeowners experiencing financial difficulties during the coronavirus pandemic are concerned that mortgage agents will now ask them to pay off their deferred mortgage bills in one go after allowing them to defer payments under the CARES Act.
The Consumer Financial Protection Bureau, however, has called on mortgage services to clear up the confusion because consumers can defer payments – a process known as forbearance – for up to a year due to the new law. The law, however, does not specify what happens after the end of forbearance, which has led some mortgage services to warn borrowers that they will have to make payments in balloons.
“We are seeing a significant increase in borrower complaints,” Kathleen L. Kraninger, director of the CFPB, said on a call with journalists on Friday. “There is a clear line on the issue of lump sum payment. They will not have to pay it if they cannot pay it. “
In April, the CFPB received 42,774 complaints, the highest number in the history of the Bureau’s complaints system and an increase of about 15% from March.
Topping the list of complaints related to the coronavirus were concerns about mortgages and credit cards. Consumers were generally concerned about their ability to pay a lump sum once mortgage forbearance ended. About 60% of mortgage complaints related to coronavirus come from people who are struggling to pay their home loans, said Kraninger.
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The office is working with the Department of Housing and Urban Development, which oversees the Federal Housing Administration, to streamline information to borrowers so they know their rights, said Kraninger.
“If a consumer still has a concern and they don’t seem to get the relief they need, they can come to us,” said Kraninger. “We will take an aggressive stance against those who do not accommodate consumers as they should. “
How to get abstention?
Withholding allows you to suspend or reduce your mortgage payments, but you still have to repay those missed payments in the future.
To benefit from forbearance under the CARES law, you must contact your loan service. Homeowners experiencing financial difficulties as a result of the pandemic can request a forbearance of up to 180 days, which can be extended for an additional period of up to six months if borrowers are still in financial stress.
This relief only applies to mortgages with a federal guarantee. If you don’t have a federally guaranteed mortgage, some loan officers may have forbearance or deferral options for private or private loans.
What options are available at the end of the abstention?
The Federal Housing Finance Agency, which dictates guidelines for loans guaranteed by Fannie Mae and Freddie Mac, has stated that borrowers with federally guaranteed mortgages and who forfeit due to the coronavirus crisis do not are not required to make a balloon payment at the end of the rescue.
Mortgage advisers will contact borrowers 30 days before the end of the forbearance to discuss repayment options. If the difficulties have not been resolved, the forbearance plan may be extended, the FHFA said in a statement.
If the difficulties have been resolved, the service agent will work with the borrower to set up a repayment plan, modify the loan so that the borrower’s payments are added at the end of the mortgage or set up a modification that reduces the borrower’s monthly mortgage payment, said the FHFA.
If you don’t anticipate a substantial loss of income during the pandemic, financial planners say you should pay your mortgage as usual.
Can I negotiate?
To understand your options, you may be able to work with housing counselors who can provide advice for little or no cost, according to the CFPB. These professionals will work with you to assess your situation and help you negotiate with your mortgage lenders and services.
HUD approved housing counselors can discuss options if you are having trouble paying your mortgage or reverse mortgage. This may also include a forbearance or a modified payment program.
If you need a lawyer, there may be resources to help you through your local law society or legal aid.
How do I file a complaint?
If you are having trouble getting the relief you need, you can file a complaint with the CFPB.
First, you will need to include details such as dates and amounts in your claim. If you want to include documents, such as billing statements or letters from the company, you can also include them. Make sure to include as much detailed information as possible, as you can’t usually send a second complaint for the same problem.
You will receive updates via email and can log in to track the status of your complaint. It usually takes around 15 days to get a response.
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