(CNN) – As part of your support package by coronavirus At $ 2 trillion, the federal government has paved the way for struggling homeowners to get mortgage relief from lenders. But for some owners, help may have come too easily.
In the past two months, homeowners have crowded administrators’ websites and phone lines looking for mortgage tolerance information, allowing them to suspend mortgage payments for up to a year. And now more than 4 million homeowners benefit from leniency plans, according to the Mortgage Bankers Association.
But some homeowners were put on forbearance programs that they didn’t want, which caused them problems. Having this advantage, even if the owner makes regular payments, has prevented some from applying for new mortgages or refinancing their existing mortgages.
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“I never asked to be on the show,” said DJ Stavropoulos, an Atlanta real estate agent who said he called his mortgage manager Wells Fargo in March just to find out how ‘a payment license.
However, in early May, he received a letter from Wells Fargo confirming the deferral of his loan.
“I was alarmed that they did it behind my back,” said Stavropoulos. “I think the average person is as confused as I am and would be surprised to find that they are getting financial relief and don’t know it.”
But Tom Goyda, spokesperson for Wells Fargo consumer loans, said that was not Wells Fargo’s intention.
“Simply asking questions about financial relief should not lead to applied relief,” said Goyda.
“We want customers who need help because of covid-19 to be able to request and receive a stop payment quickly and easily,” he said. “If a customer no longer needs this assistance, we will be happy to remove it from the suspension of payments.”
The accelerated rescue process
The Coronavirus Economic Aid, Relief and Security Act, or the CARES Act, sought to accelerate the relief for homeowners benefiting from federally guaranteed loans by allowing administrators to license their undocumented loans. Conventional loan officers also offered a similar tolerance.
But Mark Moore, branch manager of the Fairway Independent Mortgage Corporation in Atlanta, said the bailout bill came so fast and the administrators went so fast trying to handle millions of calls that there was very confused.
“In a rush to put pressure on the CARES law, they have included leniency, which is great for those who need it,” said Moore. “But they haven’t tested it. You don’t have to demonstrate the need. Anyone who wants an adjournment can get postponements.”
Moore thinks there should have been more restrictions on who could qualify and what the terms of the plans mean.
“I would have liked to see more clearly that it is for people who have lost their jobs because of lust, not for people who do not want to make payments,” he said. “And more clarity on what will appear on your credit report and how you can refinance or get a new loan once you are in default.”
This lack of clarity has caused a wave of confusion and consumer complaints.
According to the non-profit research group US Public Interest Research Group, complaints to the Office of Consumer Financial Protection have increased dramatically since the start of the epidemic and include several owners who have reported receiving indulgences without asking.
“Monitoring the default process is woefully inadequate, so it’s not surprising that the biggest coronavirus problems are related to mortgages,” said Mike Litt, consumer campaign manager for US PIRG.
One person who filed a complaint with the CFPB said: “I contacted my mortgage service … for information only, to see what programs they offered during the covid 19 pandemic … I said that I did not want to NOT follow a tolerance plan for Payments “.
The owner of the house says they were still clemency and when they contacted the administrator to remove him from the program, they were told it would be canceled. But that didn’t happen like that.
“The stress of this situation affected my physical and mental well-being, it affected my personal relationships, as well as the ability to do my job. I spent hours on the phone and writing letters… I wonder how many others are doing this? Wrote the owner.
The impact of leniency plans on refinancing or obtaining a new loan
Loan managers like Wells Fargo make it clear to homeowners that they are not entitled to a new mortgage or refinance an existing mortgage until the end of their suspension plans.
On Tuesday, Freddie Mac and Fannie Mae provided advice on this. The mortgage giants have released a clarification of the requirements for homeowners affected by the coronavirus who are either lenient or have recently left the payment exception, allowing some to still get new mortgages or refinancing, according to the Federal Financing Agency of Dwelling place.
Borrowers who are technically in default but continue to make payments are eligible to refinance or buy a new home if they are up to date on their mortgage, said Federal Housing Finance Agency director Mark Calabria. Borrowers in default will be able to refinance or buy a new home three months after their leniency ends. They must have made three consecutive payments as part of their payment plan, deferred payment option or changing their loan to get a new loan.
The action allows homeowners to access record mortgage rates and reduce their monthly payments, Calabria said. This will allow the mortgage market to evolve in the most efficient way possible, he said.
The Impact of Unwanted Tolerance on Your Credit Score
Postponing payments should not hurt your credit score. According to CARES law, if you are in a leniency plan due to the pandemic, you must be declared up to date in your payments.
But lenders can add a special comment code that indicates your account is forgiving with the reports they send to credit reporting agencies, said Francis Creighton, director and CEO of the Consumer Data Industry Association.
Can a borrower see these codes?
“It depends on how a lender reports the deferred payment,” said Creighton. “Consumers should ask their lender how they plan to report any deferred accounts to the credit reporting agencies.”
Consumers can get their credit report every week until April 2021 on AnnualCreditReport.com for free and check their credit.
“Credit scores are dynamic and weigh on many different factors,” says Creighton. “Although you may be flagged as up to date, other factors may cause your score to change, including the amount of credit you use or you may have opened other accounts that could affect your score, in some cases. cases positively and in others negatively ”.
If you have been incorrectly included in the deferral of payment, Creighton concludes, you must dispute this directly with the lender or by contacting the credit bureau which displays the incorrect information.