September 28, 2021

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Mortgage News

Washington homeowners experiencing ‘sticker shock’ when pandemic-related ‘mortgage forbearance’ ends

Millions of Americans who have put their mortgage payments on hold for six, 12, or 18 months will all have to resume payments by fall.

CONCRETE, Wash. – Larry Tusten was back to work and on better financial footing after several pandemic shutdowns at the meat processing facility he works at in Skagit County.

He was eager to collect his monthly home payments, which were delayed by a federal program called “Mortgage Forbearance” that suspended mortgage payments for borrowers.

It’s a plan that nearly 7 million Americans signed up for at some point during the pandemic.

Tusten resumed his work with double payments – sending money twice a month instead of once – to his loan service provider, the US bank.

Then a disturbing message came in the mail. The US bank told him his new monthly payment would be three times the amount of $ 759 he paid before the forbearance.

“It didn’t make sense, it’s a lot more than I can afford,” said Tusten of the US bank’s monthly payment of $ 2,237.

In the notice it was listed as a “… voluntary monthly payment amount” with a due date in July. Tusten said he couldn’t call anyone from the U.S. bank to change the payment schedule. Fearing that he would default on that home loan and face foreclosure, he hired Washington foreclosure attorney Nadia Kourehdar to resolve the dispute with the US bank.

“Banks will always try to make as much money as possible in the shortest possible time, even if it means that they are not following the guidelines that the government has given banks,” said Kourehdar.

Kourehdar said she heard from several customers who abandoned their indulgence and whose loan service providers are suggesting larger repayment plans than they can afford.

“Larry is not alone,” said Kourehdar.

Federal government-sponsored home loans – Fannie Mae, Freddie Mac, FHA – all have guidelines on options to be offered to borrowers at the end of a grace period. But Kourehdar said the banks servicing these loans on behalf of government agencies are keen to charge additional fees by collecting the money faster. You may not be able to make borrowers aware of all of the repayment options.

“Personally, I had a lot more clients than Larry at the time, and they came from different banks,” said Kourehdar.

She was able to negotiate with the U.S. bank to get Larry closer to the $ 759 monthly payment he was used to, an option Larry should have had from the start.

In Larry’s case, the arrears from six months of non-payment were added to the end of the loan. In fact, he has a six month longer loan with a manageable payment of $ 759.

The Federal Consumer Finance Protection Bureau (CFPB) says the millions of Americans who have put their mortgage payments on hold for six, 12, or 18 months will all have to resume their payments by this fall. Many, like Larry Tusten, already have it. They find that the forbearance program, which only required a written letter stating hardship, is a little more complex to end.

“There should be more than one or two options (from your loan service provider),” said Mark McArdle, CFPB associate director for mortgage markets.

“You need to speak to your servicer,” McArdle said, which many did not have to do to start the forbearance process.

McArdle said the government-backed loans – 80% of which are home loans – are needed to offer deferrals, where credit service providers postpone missed payments until the loan ends and extend the term of the loan. He said some borrowers may choose to “reinstate” their loan if they make larger payments for a period of time to make up for missed payments

If your credit service provider doesn’t give you options, you can lodge a complaint with the CFPB.

CFPB recommends seeking help from a. pick up HUD housing advisor if you need help navigating the system.

McArdle said it was important to work with your loan service provider and keep your mortgage up to date since the federal foreclosure ban has expired so banks can bring proceedings against defaulting borrowers.

The US Bank sent the following statement in response to KING 5’s questions about the Larry Tusten case:

For more than a year, US Bank has been committed to working with customers in distress due to COVID-19 to provide individuals with the option that best suits their needs when the customer needs payment facilitation. When concluding a deferral agreement, the bank checks the customer for all available post-forbearance options that are tailored to his individual financial situation. However, there may be times when the solution sought by the customer is not met at this point in time. In these cases, customers are encouraged to come forward to discuss their situation. The best solution will depend on each individual’s financial situation, and the bank’s top priority is to keep customers at home with affordable monthly payments. “

“Losing the house would be everything for me,” said Tusten.

Larry is now well on his way to paying off the remaining $ 20,000 on his home loan and then retiring to his home in Concrete.