COVID-19 Mortgage Forbearance
COVID-19 Mortgage Forbearance
As previously written, the pandemic of COVID-19 has now reached the unprecedented levels that many feared. While we as a nation will move on and get past this, it doesn’t make the current climate any less stressful or full of legal mine fields.
There are moratoriums regarding federally backed loans as to foreclosures (FHA, VA, USA originated loans) for a period of 60 days. But those moratoriums are to not go to judgment or a foreclosure sale, they can technically keep progressing the matter to that point. This is tantamount to running to the finish line of a race, just stopping right before the finish line until they are allowed to. If you don’t know your loan type, hiring an attorney may assist in educating you on that and stopping your servicer or lender from even acting that way.
The governor of Florida has also halted, as of April 2, 2020, foreclosures and evictions. Again, the case itself is not technically stopped, only the ability to get a judgment or a foreclosure sale proceeding or an eviction writ of possession to be followed up on by law enforcement. Hiring an attorney may be able to stop anyone from even acting that way.
The federal government sent out a directive to the banks that they should be open and evaluate each loan to cease mortgage payments for up to a year. The banks did not like this broad scope and warned this was too broad or long and would not be sustainable. The government’s actions, of course, caused an onslaught of people proactively reaching out to their servicers to achieve this. What happened was that no one could get to the banks to do this and the banks were unorganized. Read this article that is a very accurate account of this. https://www.cnbc.com/2020/03/27/bank-of-americas-mortgage-deferrals-called-misleading-here-is-what-to-know.html This is a result of the banks and servicers diminishing their staff as all businesses have started. However, as this is a federal mandate, if they are not working with you, there may be a cause of action against them that an attorney may assist to make them do this or you get compensated for it.
What is further important, as was the case with similar situations after Hurricane Irma, the creditors after this passes and dies down will start to come in full force and effect to recover the monies and past due amounts so that they can turn profitable and pay back anything they owe the government as a bail out to and to appease its investors. For example, the banks appear to only be setting of payments 3 or 4 months, not 12. Further, those are forbearances, which are different from modifications, which just means you don’t have to appear for a time frame. That time frame is not to the end of the loan, which would be optimal, but the end of the 4 months. So on the 5th month, you would owe all the prior 4 months and the 5th month all at once. This is not a plan to keep people in their homes and foreclosures and evictions will rise.
Again, the debt you owe to your landlords does not go away and the lease is not automatically bumped to the end, you should pay your rent during this time as when the moratorium is over, if you have not paid, they can and will likely start eviction proceedings. But, they cannot still shut off your utilities or threaten to jail you or talk to others about you owing the rent. If they do, we can help compensate you for their violations of the law. They are in a pinch, but so are we all and that doesn’t justify breaking the law.
It is critical to be ready for post COVID-19 financial repercussions and the hiring an attorney is critical in stopping the bank or your landlord from proceeding faster by knowing the rules. An attorney will guide you through the many paths you can take to obtain the best result possible for you.