CHARLOTTE, N.C. — When it comes to paying your bills, the biggest one is without question, for most of us, at least, the mortgage or rent, and in these tough financial times it can be the hardest to pay.
WCNC Charlotte talked with some of the biggest banks and lenders to get some advice for people considering all their options.
Let's tackle rent first. Did you know that 43 million Americans are renters nationwide? Brian Carberry is known as the rent advice guy for Apartment Guide. He's been extremely busy during the COVID-19 pandemic helping people in search of relief.
If you're having trouble making rent, Caberry says to get creative and get talking with your landlord. There are many options available, so loop them in if you lost your job or were furloughed. Let them know what's going on and ask them what they might be willing to do.
He further suggests offering up a payment plan, and remember that security deposit, first and last months’ rent? Use that, or some of that if they’ll let you. Get creative and ask, but don’t just stop paying. You’ll hurt your credit and end up evicted eventually.
Now let's talk about mortgage payments. At Bank of America, you can extend your 90-day mortgage payment deferral for an additional 90 days. You don't need documentation of job loss and there is no cost associated with this option. Most banks and lenders will have similar options, but you must ask.
Now to mortgages.
Bank of America
"For Bank of America-owned mortgages, we are offering up to 90 days of deferred payments for people suffering a hardship related to COVID-19 with payments added to the end of the term of the mortgage. We also have said that if the crisis lasts longer than 90 days we will extend the deferral period until it is over. For mortgages that we service on behalf of other entities (mostly that would be Fannie Mae and Freddie Mac), we follow their direction for client relief. In the beginning weeks of the crisis that has been 90 days of deferred payments with choices at the end of that 90 days to either: pay the three months deferred payments then; add an amount to future payments to catch up; or add additional payments at the end of the term of the loan. The CARES Act included direction to these “government-sponsored entities” to offer up additional time, if necessary."
To make it easy for clients, we have established an online Help page where people can defer credit card, mortgage and auto loan payments online at www.BankofAmerica.com/Coronavirus
There is no documentation required. It is granted upon request from a client asserting a hardship. Given the simplicity of it, it’s all very quick and we encourage people to do it online if they can if they have suffered a hardship. The only people who can’t do this simply are people who were already significantly behind on their payments (those folks require a conversation). A client can make a request to pay part of their mortgage if they’d prefer during this period.
In terms of cost, there is no special fee for deferring and we don’t make any reports to credit bureaus, etc. Interest on the mortgage loan (these days most loans would be around 4 or 5 percent) does continue to accrue during the deferral period and can be paid at the end of the loan or whenever someone wanted to pay it.
Truist Mortgage is actively engaged with clients who are affected by the COVID-19 pandemic and is helping them in a number of ways. Our Home Preservation Team is working directly with our clients to determine the best solution to meet their unique needs and ensure that they are able to sustain homeownership during this extraordinary, challenging time.
Current Mortgage Clients
- We are working closely with a number of government agencies, including the VA, FHA, Fannie Mae, Freddie Mac, and USDA, to provide the most current mortgage relief options based on the latest guidelines from the recently passed CARES Act. This includes a foreclosure moratorium of federally backed mortgages for at least 60 days beginning from March 18, 2020.
- Like many mortgage lenders, we are experiencing longer than usual hold times in our call centers due to the high number of clients who need help. We’re actively working to streamline this process and are adding additional representatives to assist clients. In the meantime, we encourage clients to visit our special mortgage website here for the most up-to-date information and frequently asked questions concerning assistance with mortgage relief during COVID-19.
Option to Suspend Mortgage Loan Payments
Individuals impacted by COVID-19 events may request a mortgage payment forbearance. However, there is broad confusion and misunderstanding among consumers about how forbearances work. Forbearance is not payment forgiveness. Clients must pay back the entire forbearance amount after their forbearance period ends. If a client cannot afford to repay the deferred amount in a single payment at the conclusion of the forbearance period they have three other options to repay their suspended payments: (1) a repayment plan, (2) a loan modification, or (3) payment at the end of the loan term. The options available to the client depend upon the client’s loan type and specific financial circumstances.
Our standard forbearance period is three months. However, in this COVID-19 environment we are offering initial forbearance periods of either 90 or 180 days, with possible extension of the forbearance period for up to a year as circumstances warrant. No additional late fees or penalties are incurred and the account will not be reported to the credit bureau agencies as delinquent as a result of entering the forbearance.
We recognize not all clients may be able to pay all of the suspended payments in a lump sum at the end of a forbearance period. We will work with clients before the end of their forbearance to explore repayment options available for their individual loan product and circumstances, including loan modifications.
A loan modification restructures an existing loan’s terms to help the borrower retain their home despite financial difficulties, including alternative ways to repay the amounts suspended during the forbearance period. There are different considerations for each borrower to assess, and multiple types of loan modifications. Criteria such as loan type and/or account status will determine what modification options are available to each individual borrower.
Clients Seeking a New Mortgage Loan
- Clients may benefit from the current interest rate environment by potentially lowering their monthly payments through refinancing. Because of the challenges created by COVID-19, which may impede getting loans closed in a timely manner, we’ve extended the rate lock period on refinances to 90 days.
- We have many clients with new mortgage loans currently in process and we are working hard to keep their loan closing on track:
- Some county courthouses have closed or there may be delays. We’re working with each county individually to see if electronic recording capabilities are available. If not, we’ll work with our title insurance partners on all available interim options.
- We can receive secure loan documentation via the online portal, email, regular mail or fax. If these options aren’t available, a client should contact their loan officer to make special arrangements. SunTrust and BB&T (now Truist) do not currently offer electronic signatures for closing documents.
- When a full appraisal is required, an appraiser needs to complete an interior and exterior inspection of the home. We’re prepared to follow the guidance from government agencies and offer flexibility if an appraiser, after speaking with the client, determines that an interior appraisal is unattainable.
- Loan documentation expiration dates for paystubs, bank statements, etc., are based on government and agency guidelines. We’re currently working with these organizations to identify available extensions and alternatives.
- Employment verification is required prior to loan closing. We’ll make every attempt to validate employment, but if we’re unable to do so, a closing may be delayed.
Wells Fargo responded to our inquiry with this advice: “Per your inquiry, at the end of the initial three-month payment suspension, Wells Fargo has a number of potential options available for mortgage and home equity customers. Depending on the loan investor and other factors, those options could include a continuation of the payment suspension, moving the missed payments to end of the loan or a modification to address longer-term financial changes that may impact their ability to keep up with their monthly payments. We’ll need to talk with them directly to understand their circumstances and identify the best way to help them going forward.”
Just remember, foreclosure and eviction have a long reach. You will have trouble getting another mortgage and future landlords run credit checks. And, want to buy a car and finance it? You’ll have problems for years just to save a few bucks now.
Housing is the No. 1 monthly expense for most people. So, amid the spread of this novel coronavirus, rent payments may be difficult to come by. If you're having trouble paying your rent — or fear (see “What Renters Fear Most During Coronavirus” survey) you soon will be.
Communicate with your landlord: be honest, open, and upfront with them and do not wait until your rent is due to spring your need for help.
Ask if you can restructure your payments.
Present them directly with a plan based on your current needs and limitations. Do this preferably by email or phone to maintain social distancing.
Have empathy for your landlord. Most landlords want to help you in this time of need, but they are not immune to the economy themselves. Avoid making demands since you are asking them for help.
What if your landlord cannot or will not help?
Apply for rental assistance
1. U.S. Department of Housing and Urban Development's website offers links to a number of helpful resources - rental assistance. The Salvation Army, Catholic Charities and United Way may also be sources of rental support. If you or anyone in your household is a veteran, HUD and the U.S. Veterans Administration has programs that can help with rent.
2. Take out a loan If you have solid credit and can prove that despite the current crisis you are a trusted recipient, you can turn to your bank and apply for a short-term loan. If you own a small business, you can apply for a Small Business Administration Disaster Loan to be used for business and personal expenses.
3. Take advantage of the CARES Act. The $2.2 trillion stimulus package passed last month is offering a cash payment to almost every American.
Are you going to be evicted if you cannot pay? Likely no….
- The CARES Act includes a freeze on evictions of tenants for non-payment in buildings financed by federally-backed mortgages
- For those not covered in the stimulus, most states and a number of individual municipalities have issued their own stays of eviction, many in place between one and three months.