What to do when my COVID-19 forbearance ends?

What happens with a forbearance

When mortgage forbearances under the CARES ACT were promoted, no one realized 6 months later we would still be in the midst of this COVID crisis with forbearances ending, and no easy answers in sight.

Information was confusing, and many people signing up for forbearances did not realize that the full amount would be due at the end of the agreed upon period in order to become current on their mortgage.

Also unclear was the impact a forbearance has on your credit and the ability to qualify for a refinance.

What should I do?

Experts say it’s important to reach out to your lender ahead of the ending of your forbearance to discuss options. Such as converting the missed payments to a deferral on the end of the loan (see articles below).

Also, you’ll want to check your credit report to see how exactly this is being reported.

Consumer Resources

Where can you get help? These consumer resources include links for helpful details:

What happens when COVID forbearance ends?Freddie Mac
What to do after you receive a forbearance? Consumer Finance
What happens when loan forbearance endsExperian.com

“Under provisions of the CARES Act, if you get mortgage forbearance on a federally backed loan as part of COVID-19 relief, your loan servicer cannot charge extra interest on forbearance repayments or require you to repay excused payments in a single lump sum at the end of the forbearance period.” Experian.com

Mortgage Loan Forbearance Options

There are different options on different types of loans.

What’s so confusing are the ‘sound bytes’ shared, when what’s needed is detailed information regarding your particular situation.

How do I negotiate with my lender about my forbearance?

Negotiating with your lender can be scary, and confusing. Two local experts recently offered their insights and availability on my Podcast to help home owners in the Greater Philadelphia and New Jersey areas – Lee Perlman, Bankruptcy Attorney and Michael Daiello, Real Estate Dispute Attorney and Litigator who specializes in helping landlords who face the impact of tenants not paying rent under the CARES ACT rental forbearance protections.

Take action now!

Please know you are NOT alone; see my detailed market update on distressed properties – Q3 Distressed Property Report ;

Spike in 2020 Foreclosures

The most important thing to do if you’re facing problems with your mortgage is to ask for help right away!

It’s emotionally challenging and can feel overwhelming, but there is hope, and there is help. Doing nothing may put your property at risk of foreclosure.

Start with visiting www.FightTheBank.org for more information about short sales and options to avoid foreclosure.

Please comment below or reach out for a confidential conversation. I’ll gladly connect you with local experts who can help in your situation.

Pre-Foreclosure Market Update – Q3 2020

Foreclosure Market Report

September showed record breaking sales in Philadelphia, but what about the dramatic spike in pre-foreclosure distressed properties? Does the foreclosure market threaten to haunt real estate values in Philadelphia?

Multiple realities of quantum physics

Market reports are complicated with what science fiction buffs might call “multiple realities” – especially true in our current national economy. You don’t have to understand quantum physics, but there are many sides to the story of current real estate market trends on the Main Line and in the greater Philadelphia area.

You’ve probably heard me say this before, analyzing real estate markets is a lot like watching the ocean. What appears to be calm water, can have cross currents and under tows to be aware of.

Let’s start with the good news!

September was record-breaking month for both number of sales and median sales price for Philadelphia County.

On the Main Line, demand continues to exceed supply with values on the rise and days on market declining.

Due to changing buying patterns due to COVID along with the exodus from New York and other dense urban areas our small, quiet Main Line townships have literally shifted into prime destinations.

What about October?

In October the number of showings and new contracts declined. However, all indications are that values remain stable in most areas.

Analysts explain “markets despise uncertainty” and it appears people were holding off on buying or selling until after the election.

An “undertow” of loan delinquencies

Looking backwards at September data one might think that it’s time to surf the big waves and catch the ride of your life.

However, there’s an ‘undertow’ most analysts reporting on real estate are not addressing – a sharp increase in loan delinquencies.

The extreme spike in the number of mortgages delinquent 90+ days or in pre-foreclosure is at a level we haven’t seen since 2009.

Mortgage delinquencies spike in 2020 due to COVID

The “backstory”

What complicates delinquent mortgage reporting in 2020 is the surge of mortgage forbearances entered due to COVID-19 CARES ACT.

Incorrect information and bad advise early in the COVID pandemic led to confusing a mortgage forbearance with a deferral. What also wasn’t clear was the impact on credit and ability to refinance.

Many owners did not know full “balloon” payments would be due at the end of their forbearance period and are in a difficult situation confused about what to do as their forbearance ends.

Could the delinquent property data be incorrect?

What the graph above doesn’t address is whether the spike in delinquencies could partially be due to incorrect credit bureau reporting of mortgages in forbearance.

For instance, ConsumerFinance.org advises checking your credit report if you have a forbearance as it should not be shown as a loan default;

“Servicers may report that your account is in forbearance. However, if you were otherwise current on your account and have received relief as defined by the CARES Act, your servicer or creditor is required to report your account as current”

What to do now?

As you can see, I’m a fan of analyzing data. However, when it comes to deciding the right time to buy or sell it’s important to look at the big picture of your goals. History has shown real estate values survive market changes in the long run. It’s all about what’s best for you.

Please contact me for a confidential consultation. We’ll look at the micro-market trends for your particular goals and location.

And if you know anyone facing problems paying their mortgage who wonders what to do now, it’s time to get help! For more information about short sales and options to avoid foreclosure, visit FightTheBank.org.

Be sure to subscribe for future blog updates. Let’s talk!

What if my tenants can’t pay their rent due to COVID-19?

Attorney Michael Daiello shares insights into options to avoid foreclosure when you can’t pay your mortgage.

“I have received a number of phone calls over the past several weeks about the duty of landlords to pay lenders on mortgaged properties. The obvious best outcome is when borrowers and lenders work together for a reasonable solution. But what options are available if negotiations are unsuccessful? Does the current environment trigger a “force majeure” event under a lending agreement?

In spite of the lockdown, there is no general law that grants a borrower entitlement to cease payment. However, the language of any Note, Mortgage or Security Agreement may vary from case to case.

Failing to pay a mortgage will eventually result in a lender initiating a foreclosure action. A property owner receiving a notice of foreclosure often wrongly assumes there‚Äôs nothing they can do. Some of the options include applications for modifications of the mortgage, a short sale, a deed in lieu of foreclosure or fighting the foreclosure case in court.”

This month’s guide is a quick reference sheet of potential options for foreclosure defense. Please share this month’s guide with any small businesses or professionals that are concerned about foreclosure.

For more information on how to avoid foreclosure whether it’s your primary residence, vacation home or an investment property, visit FightTheBank.org and let’s talk. I’ve been helping home owners successfully avoid foreclosure and negotiate debt forgiveness since 2008. #fightthebank #phillymarketminute

Luxury Short Sale Failure

What do you think of when you hear words like “foreclosure” and “short sale”?? Most don’t think of multi-million dollar estate homes. But reality is that sometimes luxury home owners face impossible situations. Like a home that’s worth only 1/2 of what it was in the peak of the market, or simply “under water” on values and the market won’t support a successful sale.

No one is exempt from tragedies like a medical crisis that can turn your life upside down, no matter what your income bracket. I’ve found my luxury clients face some additional challenges. While many people suffer from lack of resources, on the other hand bad information can come from high net worth advisers.

For instance, a client of mine was given advise by her attorney to make significant repairs / improvements prior to selling based I believe on a Zestimate valuation. It wasn’t a correct valuation and ended up causing the owner to incur more debt instead of simply resolving the bad mortgage debt.

This home was on the market for $3.5M and failed as a short sale and went to foreclosure. Now it’s listed by the bank for $1.9M.

No matter what the situation is, please contact me. No one has to go to foreclosure. There are options! For more info – fightthebank.org