A couple of items of interest came across my desk this week. Of course, they revolve around COVID-19. Is there any other news?
What is forbearance?
The first item deals with the term forbearance and recent congressional legislation imposed upon lenders.
Lenders are required to work with those mortgagees who are not able to pay their monthly mortgage payments due to income loss caused by COVID-19. As of this morning, reports indicate that three million mortgages are in forbearance.
Forbearance is not forgiveness. It is only an agreement between a mortgagee and lender to forestall foreclosure and put in place alternative financing for missed payments.
Reports have surfaced of agents advertising–“purchase a home and have no payments for a year.” If this is told to you, run. I consider this fiduciary misconduct. Probably not illegal, but certainly unethical.
Forbearance should only be considered as a last resort. There are many ways it could go sideways for the borrower–most often because the borrower does not understand the “payback” mechanism. Also, seek tax advice.
If forbearance is your only option, then pursue it to save ownership of your home. Do not call customer service, waste of time. Contact the department that handles loan modifications or owners in distress. Most servicers will display the responsible department on their website.
Remember, there will be a time of reckoning
Also, make sure to ask your lender if selling your home is allowable when the mortgage is in forbearance.
On a lighter note…
I read the prediction of a real estate guru suggesting a future housing boom in the next year or two. Why may you ask?
The reasoning, a baby boom is on the horizon—something to do with couples staying home all day, reengaging with each other. I mean, you have to fill the time doing something.
With more kids comes the need for larger homes or a first home.
An apartment for two is cozy, add another, it becomes crowded.
What do you think? Is a baby boom on the horizon or just someone proselytizing optimism for the real estate industry?