Mortgage Lenders Allow Borrowers to Delay Monthly Payments
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What does the stimulus bill say about mortgage forbearance during the coronavirus crisis?
Here's your money briefing for Monday, April 6th. I'm J.R. Whalen for The Wall Street Journal. The coronavirus pandemic is making it hard for many people to pay their monthly bills, not the least of which is their mortgage. Now some lenders are coming forward to let people delay payment for several months as they get back on their feet.
It's if you have been affected by the pandemic. That doesn't mean that you necessarily have to have tested positive, but it does mean that you, your family, your income has been affected by this.
That's Wall Street Journal personal finance reporter Julia Carpenter. Coming up, she'll tell us who might be eligible and how interest works if payments are delayed. That's after the break.
Soon, millions of Americans will start receiving stimulus payments to help cover expenses during the pandemic. But that one-time payment won't stop monthly bills like mortgages from coming.
Who is eligible for mortgage payment suspension under the new guidance?
Wall Street Journal personal finance reporter Julia Carpenter joins us with details on how many mortgage lenders are letting homeowners delay their monthly payments. So Julia, just to be clear, this is a way for people to suspend their mortgage payments. There's no actual cancellation of payments involved, right?
And that's something that's important to clarify on the front end. Mortgage forbearance is not the same thing as mortgage forgiveness. What it is is more of a deferment. So you're allowed to push those payments and either tack them onto the end of your loan or have what they call a balloon payment at some point along the life of your loan.
How do mortgage borrowers go about doing this?
How do homeowners apply for mortgage forbearance and contact their servicer?
So the first thing to do is call your mortgage company. People can look on the website and glean a lot of information from there. But a lot of times how mortgage companies are interpreting this forbearance guidance is particular from lender to lender. So it's important to get in touch with the servicer and get some details as to whether or not you qualify.
Now, this is like anything that's happening with unemployment benefits. Then there's probably a rush of calls and emails to mortgage companies.
Yeah, we heard from several sources that call times have increased a lot. So some people are on hold for 45 minutes, an hour, or even an hour and a half.
Now, what kinds of mortgages are eligible?
So this applies to federally backed mortgages, the forbearance guidance that was most recently included in the stimulus bill. But you can also ask your servicer about forbearance for non-federally backed mortgages. And that's something that's just particular for mortgage company to mortgage company.
Does this only apply to people who have tested positive for COVID-19?
So luckily for many people, the guidance is much broader than that.
Which types of mortgages are covered by the federally backed forbearance rules?
It's if you have been affected by the pandemic. That doesn't mean that you necessarily have to have tested positive, but it does mean that you, your family, your income has been affected by this. So if you were laid off, for example, or I spoke with one man who said that he thinks it could even be interpreted if you're underemployed, if your hours have been severely reduced or if your ability to work has somehow been affected.
Now, as people shift or delay their payments, does interest still accumulate?
yes and that's what gets a little tricky so most of the time you won't know how that forbearance will be structured until the forbearance ends so a lot of servicers allow for repayment plans that just extend the life of your loan as i mentioned earlier instead of your loan ending at one date in the future if you miss three payments it'll end three payments beyond that date other servicers instead change the terms of the loan so that you're paying a little bit more every single time you make a payment. Sometimes it's a balloon payment, like I mentioned, which is just one lump sum that you pay somewhere along the life of the loan. But the entire time this is happening, interest is accruing.
But would it affect somebody's credit score?
That's something we're still not sure about.
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Chapters
6 chapters
1
What does the stimulus bill say about mortgage forbearance during the coronavirus crisis?
0:05–1:02
2
Who is eligible for mortgage payment suspension under the new guidance?
1:02–1:40
3
How do homeowners apply for mortgage forbearance and contact their servicer?
1:40–2:41
4
Which types of mortgages are covered by the federally backed forbearance rules?
2:41–4:04
5
Will interest and credit reporting be affected if I delay mortgage payments?
4:04–4:41
6
What should borrowers do while waiting for forbearance approval and when is it a last resort?
4:41–5:04
Speakers
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