A West Hollywood resident and longtime mortgage client of mine works in the arena entertainment industry — an industry hard hit by coronavirus as concerts, sporting events and the like have come to a screeching halt. She is one of the lucky ones because she still has her job and her excellent credit.
But she was the first income-distressed borrower to contact me a few weeks ago about refinancing to lower her rate and payment and pull some cash out to pay off accumulated consumer debt.
“I depend on my annual bonus to help make ends meet,” my client said. She believes there is no bonus coming this year. Worse, the longer this contagion goes on, the more angst she has about keeping her longtime position and making her house payments.
What about mortgage holders already walloped by dramatic income drops, or worse, a job loss?
Here is a sampling of the efforts to assist you in these extraordinarily horrific times. You must contact your mortgage servicer if you are in need. Nothing good can come from sticking your head in the sand.
Freddie Mac is offering up to 12 months of temporary payment postponement, or forbearance, waiving assessments, penalties or late charges, suspending derogatory credit reporting, foreclosures and evictions at least through May 17. To find out if Freddie Mac owns your loan (because you always make your payment to a mortgage servicer, not Freddie) go to www.FreddieMac/lookup.
Fannie Mae is making a similar offer. Go to www.knowyouroptions.com to learn if Fannie owns your mortgage.
HUD announced a 60-day eviction moratorium on FHA mortgages. Go to its website at www.HUD.gov to learn about other options for struggling mortgage borrowers.
Bank of America is offering deferred mortgage payments and no negative credit bureau reporting, among other options. Wells Fargo Bank is offering fee waivers and payment deferrals and has stopped all foreclosure-related activities. Citi, through its sub-servicer Cenlar, suspended foreclosures and evictions for 60 days according. Chase Bank is offering forbearance options.
Veterans Affairs is urging its partners to offer forbearance, repayment plans or loan modifications to holders of VA loans.
There are a bunch of other borrowers out there who may not be lucky enough to have their loans owned by mortgage giants Fannie and Freddie or be insured by FHA or owned by some of the big banks.
Call your servicer to figure out who owns your mortgage. Find out what assistance is on the table for you and yours.
Let’s be clear. Nobody is talking about forgiving your principal and interest payments altogether. Sooner or later you will be forced to deal with this. If you need the payment deferral option, the likelihood is the balance will be thrown on the end of your loan.
Something else.
We simply don’t know when coronavirus is going to be contained. If you have an existing equity line-of-credit, or HELOC, and you do not have at least 12 months of cash reserves for your total monthly living expenses, I strongly advise you to pull all the cash out of your line of credit and put it in your bank account. You can always put it back when the coast is clear.
During the mortgage meltdown days of the Great Recession, multitudes of families felt safe because they had a HELOC in their back pockets — or so they thought. Then, some banks froze their HELOC’s without warning.
