The BEST mortgage forbearance plan

reverse mortgage a forbearance plan



Why older homeowners should consider a reverse mortgage as the ultimate ‘forbearance’ program

Many struggling older homeowners have already paid down their original loan balance significantly. Should they refinance the mortgage into a new 30-year term? Not if they want to eventually stop making payments or expect a drop in monthly income- a common scenario as retirees discontinue working and face unexpected healthcare expenses…

3 comments

James E. Veale, CPA, MBT June 29, 2020 at 4:01 pm

(Shannon, Robert seems like a great friend.)

A decent summary was posted by the CFPB on its website and can be found at

https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/mortgage-relief/

You will have to click through to the webpage but there is a general summary of repayment options for federally backed mortgages and non-federally backed mortgages. They are not detailed and will not provide a complete picture of what you will need to know. The key is there is a great degree of latitude some lenders offer in repaying the missing payments.

Dr. Jack Guttentag did an article on the subject. The schedule linked to the article is incorrect in several ways but it does demonstrate how additional interest may apply. Some note owners are not charging interest beyond the interest inherent in the missed payments by only demanding repayment of the missed payments.

Other when payment options exist such as repayment over an agreed period of time. Another is simply making them into a balloon payment that is due when the loan terminates. Other options may also apply. The important thing is to determine the options through the servicer as soon as possible. Many lenders list the options they offer on their websites.

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Jay Allen Kaplan June 30, 2020 at 7:39 am

Great Subject Shannon. Now we have to get to grips with how reverse lenders are dealing with borrowers who took advantage of this forbearance and have late payments showing on credit and/or mortgage statements. I am seeing an uncomfortable diversity in how this is being handled. Let’s try to get to the bottom of this.

Jay Kaplan, voted the #1 HECM lender in the world by his wife and son.
DrHECM.com

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The Critic June 30, 2020 at 1:24 pm

Jay,

‘…dealing with borrowers who took advantage of this forbearance and have late payments showing on credit and/or mortgage statements.”

That is interesting because the purpose of forbearance is to avoid late payments or dings on credit reports. None of the GSEs nor HUD are charging late payments or reporting dings for late payments.

Perhaps you can help us all by letting us know what lenders are committing this kind of outrageous behavior against their borrowers and seniors in particular. You should also bring this to the attention of Elizabeth Mann’s CFPB.

Like usual, servicers seem to find a way to bring harm to a situation intended to minimize financial harm.

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