Coronavirus help: Are California’s mortgage relief offers a good deal?

Lenders are lining up to let California homeowners with
coronavirus-related financial troubles skip some mortgage
payments.

That’s great news for the homeowners among the 1 million-plus
Californians who have recently applied for unemployment insurance,
a shocking loss of jobs. For all of last year, 2.1 million claims
were made. In 2008 and 2009, in the heat of the Great Recession,
3.9 claims were made each year.

Policymakers and bankers are rushing to find ways to keep the
sudden economic wallop from turning into a foreclosure crisis. But
before you get too excited, let’s look at what we know.

Q. Who’s in?

A. California Gov. Gavin Newsom said Wednesday,
March 25, that
Wells Fargo, US Bank, Citi and JP Morgan Chase will waive mortgage
payments for 90 days.
State-chartered banks and credit unions
also have agreed to the 90-day forbearance. Bank of America says it
will defer payments on a monthly basis until the crisis is over, a
bank spokesman said.

Q. Who’s really helping me?

A. Who is “servicing” your loan? That’s usually who’s
collecting the monthly check. Some lenders keep the mortgage they
made with you, or at least service it. But often loans are sold to
a new company collecting repayment. That servicing bank is the one
with which institution you must check.

Q. Didn’t I hear there was federal help,
too?

A. The federal agencies that package and insure
mortgages for resale to investors have told the companies that
service these loans to offer troubled borrowers some slack for up
to one year. That action may have nudged individual banks to offer
payment breaks. If your April payment is in doubt, call now because
it may not be a simple process.

Q. How do I get help?

A. Cash-strapped borrowers seeking these
payment holidays face huge unknowns. These plans have just been
announced. So, how does one apply for the payment breaks? What’s
required to get accepted for the waiver? What are the repayment
plans? Or create a tax issue?

Call. Take good notes. Be persistent.

For example, Bank of America will tack the skipped payments on
the back of the mortgage on the loans. And those skipped payments,
if you seek permission, won’t show up as a negative item on
credit histories.

Q. Is this a good deal?

A. The devil is in the details and also very
dependent on personal situations and preferences. Specifics are
lacking in this quick-moving story, but at first glance, this is
great news for many folks whose finances have been turned upside
down in a month. But caveats must be noted. Many mortgage-aid
offers following the economic collapse of 2008-09 proved to be
fruitless, if not harmful, endeavors.

Q. Can somebody help me?

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A. I can guarantee you that scam artists are
dreaming up schemes already. Please be extremely wary of any
unknown third-party that offers assistance. And never pay an
upfront fee! This is very much an “aid-seeker beware”
situation.

Q. What if it’s an investment property?

A. The less traditional the financing in trouble, the murkier
the picture. Certain government mortgage agencies have issued
guidelines about relief for investment property loans. Note that
repayment breaks may come only if the landlord needing financial
help agrees not to foreclose on tenants. Again, if you can’t make
a payment, get on the phone — soon.

Q. Can I skip my property tax bill, too?

A. No. The next house payment challenge for Newsom is property
taxes, which are due April 10.
County tax collectors insist they have no flexibility to extend
payment dates
even though the state pushed back its income tax
due dates by 60 days to July 15. If you won’t be able to pay,
call your county’s tax collector office sooner rather than
later.

Source: FS – All – Real Estate News 1
Coronavirus help: Are California’s mortgage relief offers a good deal?