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66 A LOOK AT COVID-19 RELIEF OPTIONS More than 3.5 million mortgage borrowers had asked for forbearance as of late April, according to the Mortgage Bankers Association. With unemployment near record highs and no quick cure to the pandemic on the immediate horizon, borrowers are confused about their options, according to servicers, who point out that many borrowers seeking relief now have never been in that position before. CARES Act forbearance was made available to all homeowners with a government-backed mortgage. at removed any friction in allowing people to get relief from mortgage payment. However, borrowers who were still employed were able to get relief as well. e relief includes: » FHA mortgages » Mortgages owned by GSEs (Fannie Mae or Freddie Mac) » USDA mortgages » VA mortgages Navy Federal Credit Union and other mortgage providers are enabling borrowers to automatically ask for and be granted forbearance without needing to provide any reason for the request. Other servicers did require a more formal request, though there are simple templates a borrower can use. During the forbearance period, servicers aren't allowed to charge fees or interest beyond what you would have had to pay if you were making your payments as scheduled, meaning no late fees for missed payments. In addition, thanks to the CARES Act, postponed mortgage payments due to coronavirus cannot count against a person in any way. So there isn't any negative impact to a borrower's credit score for delayed payment. However, there are borrowers who mistakenly think that the suspended payments are forgiven, which certainly isn't the case, which is why borrower education is so important, said Robert Caruso, President and CEO of ServiceMac. Under the FHFA guidelines for pandemic relief, borrowers can seek: » A lump-sum payment of all deferred amounts » An extension added to the end of the loan term equal to the number of months that payments have been deferred. For example, if no payments were made for six months, an extra six months are added to the end of the loan » Amortizations of the amount due over the remaining life of the loan "Our impacted customers are going through a terrible ordeal," said David Hughes, SVP of Contact Center, RoundPoint Mortgage Servicing Corporation. "e payment relief options that exist make sense in the grand scheme of things, but at the intimate level of an impacted household, they are sometimes not enough. And so, with empathy and understanding, we do everything we can to offer assistance, guidance, and relief." Payments in forbearance are not eligible for refinancing. With interest rates at historic lows, refinancing could provide significant monthly savings for some borrowers. Another issue, according to Caruso, is the uncertain nature of the economy coming out of the pandemic. Dr. Anthony Fauci has said there could be another surge of the virus in the fall. A start-and-stop economy could mean repayment challenges for borrowers as the GSE modification rules are currently written. If the virus abates enough for a borrower to get his or her job back and agree to a certain modification, for example, a return of the virus and subsequent job loss or reduction in hours could mean the borrower needs a second modification, which isn't allowed under the current rules. Cover Story By: Phil Britt