“We are encouraging our homeowners to continue to pay their mortgage, if there is any way possible, and utilize this program only as a last resort, because it is not a perfect solution, even for those who really need it, and is likely to only cause problems for those who don’t really need it.”
By Matt Tibbetts
Many people have heard that mortgage companies are offering a “pause” on their mortgage payments for up to 6 months, for people who are impacted by an inability to earn an income due to the CoronaVirus pandemic. This is a great program for those in desperate times right now, who can’t go to work and truly need the help. However, this isn’t a true forgiveness of the payments or a need to not pay the interest on the loan during this time. If utilizing this program, be sure to look closely at the fine print. Most of these programs still call for the loan payments to be brought current in 6 months. That means that, while you don’t have to make the payment today, you still have to make the payment soon. If you skip 3 payments, you will have to resume your payments PLUS make those 3 missed payments within 6 months.
This gives the affected homeowner the chance to not have their credit impacted by missed payments during this time, and offers a bit of relief while they suffer a temporary loss of income. When the social distancing guidelines are lifted, and the owner goes back to work, they will have to resume payments, plus find a way to catch up on the payments that they skipped.
This is important for people to understand, because we have heard from homeowners who are fortunate enough to still have their income unaffected, but are taking a “vacation” from their house payment, as the banks are not requiring the homeowner to prove their loss of income to qualify for the program. The problem with this, though, is that these homeowners are going to be faced with having to catch up on all the payments that they skipped on their vacation, and could get themselves into trouble! At Team Forss, we are encouraging our homeowners to continue to pay their mortgage, if there is any way possible, and utilize this program only as a last resort, because it is not a perfect solution, even for those who really need it, and is likely to only cause problems for those who don’t really need it.
Additionally, taking a pause from payments, when it is not really needed, strains the resources of banks who still have to pay their debt servicing, and can limit programs, lending, and nationwide bank liquidity – taking away options from others who need it.
In these difficult times, our hearts are warmed by all the stories of people standing up to do the right thing for their neighbors, and this is just one more way you can help – by keeping our economy strong and moving.
If you can pay your mortgage payment, DO. If you have no other option because of this pandemic, then contact your lender to enroll. Don’t just stop making payments. Communicate with your lender to get the form you must sign to arrange your payment plan.
Together we will get through this. If you have any questions about this program, or about how real estate values or the market are being affected by CoronaVirus, reach out to us. We are here for you.