CONSUMER TIPS IN THE TIME OF COVID-19
The Coronavirus Aid, Relief and Economic Security Act (CARES Act), passed by Congress in response to the COVID-19 crisis contains several provisions beneficial to consumers distressed by the economic fallout from the virus. Morrison Sherwood Wilson & Deola’s lawyers can assist you in taking advantage of these provisions and in navigating this new law.The Coronavirus Aid, Relief and Economic Security Act (CARES Act), passed by Congress in response to the COVID-19 crisis contains several provisions beneficial to consumers distressed by the economic fallout from the virus. Morrison Sherwood Wilson & Deola’s lawyers can assist you in taking advantage of these provisions and in navigating this new law.
Mortgage Forbearance
Consumers with Federally backed mortgages (“Fannie Mae” or “Freddie Mac”) are entitled to a forbearance of up to 180-days, which shall be extended another 180-days “at the borrower’s request.” In other words, the loan servicer must give you a forbearance, so long as the borrower attests that his or her financial hardship is caused by the COVID-19 emergency.
What is a Forbearance?
A forbearance is a temporary suspension of a borrower’s duty to make his or her full mortgage payments, and a suspension of the servicer’s ability to enforce a delinquency. The requirement that the payments be made does not go away; it is simply deferred.
What Happens at the End of the Forbearance?
The CARES Act requires that 30-days prior to the expiration of the forbearance, the servicer must contact the borrower and evaluate the borrower’s suitability for several repayment options. They may include:
o Payment of the lump sum due;
o Adding the forbearance amounts to the borrower’s monthly payment until paid off;
o “tacking” it on to the end of the loan;
o Otherwise modifying the loan to better enable the borrower to make payments in the future.
Obtaining some form of a loan modification is likely the best bet. Whatever the borrower does, he or she should fully document the negotiations with the servicer, and insist on documentation from the servicer memorializing whatever has been agreed to.
What Happens if I Don’t Have a Federally Backed Loan?
Other servicers may have programs similar to the federally backed programs, and you should check with your servicer before entering into the forbearance to find out what your options are. You may also send the servicer a “Request for Information” (RFI) letter seeking “loss mitigation” options. And you will want to document all your discussions and negotiations with the servicer.
Foreclosure Relief
Under the CARES Act, a servicer of a federally-backed mortgage loan may not initiate judicial or non-judicial foreclosure, or take any action related to a foreclosure in process, for not less than 60-days following March 18, 2020. It is possible that if you applied for a forbearance during this time, that application would extend the foreclosure moratorium.
Credit Reporting
If a borrower enters into a forbearance agreement while current, the servicer must report the consumer as current during the pendency of the forbearance.
Don’t worry about sounding professional. Sound like you. There are over 1.5 billion websites out there, but your story is what’s going to separate this one from the rest. If you read the words back and don’t hear your own voice in your head, that’s a good sign you still have more work to do.
Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.
During the mortgage crisis starting in 2008, Morrison Sherwood Wilson & Deola assisted hundreds of Montana consumers who had been taken advantage of by loan servicers and banks in the loan modification and credit reporting processes, resulting in settlements or judgments of millions of dollars. We are ready to again represent Montana consumers during the COVID-19 crisis.