Protecting Your Investment – A Guide For At Risk Homeowners

At Arrive Real Estate Group, we are in the business of helping people become homeowners and want to do everything we can to make sure you can afford to stay in your home. The impact of COVID-19 was swift and unexpected, leaving many people in a financial emergency. If you are a homeowner who is struggling or unable to meet your loan obligations, work with housing experts and your lender to find a solution, now. Don’t wait until you fall behind to seek help. Acting quickly may help you keep your home and the money you have already invested into it.

CARES ACT RELIEF OPTIONS

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts in place two protections for homeowners with federally backed mortgages:

• Your house may not be foreclosed on for 60 days after March 18, 2020. Lenders and servicers are prevented from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
• If you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account.

If you don’t have a federally backed mortgage, you still may have relief options through your mortgage loan servicer or from your state.

FORBEARANCE OPTIONS

Repayment Plan If you can’t afford reinstatement, but can start making payments to catch up, your lender may let you pay an additional amount each month until you are caught up.

Loan Modification Your lender may agree to amend your mortgage. The options include:

» Adding all the missed payments to the loan amount & increasing the monthly payment to cover the larger loan.

» Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan, to lower your monthly payment.

» Switching from an adjustable rate mortgage to a fixed rate mortgage, so you aren’t exposed to increases in your monthly payment.

» Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.

TALK TO YOUR LENDER

Talking to the lender or “loan servicer” that collects the payments should be your first step. Forbearance options may vary depending on your loan and not all borrowers will qualify for all options. Forbearance does not erase what you owe. The CARES Act specifies that when a borrower arranges a forbearance option with their lender on an FHFA, Fannie Mae, or Freddie Mac–backed loan, servicers are required to report them as “current” on their mortgage. Make sure to receive written documentation of your forbearance agreement so that you are clear on the terms BEFORE you make any changes to your payments. Remember, your property taxes and insurance payments are separate from your mortgage, even if they are compounded. You will need to contact those servicers directly if you need to make any change in the payments.

WATCH OUT FOR SCAMS AND UNFAVORABLE LOAN TERMS

If it sounds too easy or too good to be true, it may be. Here are some things to watch out for: “Guaranteed approval” or “no income verification” regardless of borrower’s current employment, credit history, and assets. Large future costs. High-risk adjustable rate mortgages where the payment rises a lot after the “teaser rate” period is seldom appropriate for families who already have had problems repaying other loans. Barriers to refinancing. Prepayment penalties that make it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan. No down payment loans. These loans may be split into two mortgages, with one having a much higher cost. Home buyers should be sure they can afford the payments. Unethical document management. Ethical lenders and brokers never ask you to sign a blank document or a document dated before the date you sign.

RESOURCES FOR PROPERTY OWNERS

The National Association of REALTORS® has up-to-date information for property owners about the federal government’s response to COVID-19. Visit the Coronavirus Resources for Property Owners section of www.nar.realtor/coronavirus for details about how federal agencies, lenders, and bank regulators are working to help to homeowners protect their investment.

Remember, if you are able to pay your mortgage, continue to do so. If your current lender isn’t willing or able to help, you may be able to refinance your current mortgage with another lender. Be wary of advertisements like “Cash for Houses/Any Situation” or “We Buy Houses for Cash.” These may be scams that bait homeowners with the promise of rescuing them from imminent foreclosure. If you think selling your home is your best option, give us a call to see how we can help maximize the return on your investment. We are in this together!