Vol. 12 - Mortage Crisis on the Horizon
Conversations with a CFP, Vol. 12 - Mortage Crisis on the Horizon
In this episode, we are addressing the dismal reports that many people are expected to default on their mortgage in the next few months. We cover:
What you can do if you can't pay your mortgage
How mortgage companies are responding
Possible balloon payment
If property taxes and insurance payments included
Will it be reported to your credit
Request everything in writing
Article referenced: Homeowners' Savings Crisis Will Trigger Mortgage Time Bomb Next Month
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TRANSCRIPT:
Naseema McElroy (00:01): All right. Nurses on FIRE, we are back with Leisa Peterson and we are going to talk about something that is reminiscent of our last recession on this call and something that a lot of people feared would happen again. And so we're talking about a mortgage crisis that is potentially on the horizon because with a lot of job losses or cutbacks and furloughs, we are seeing that people do not have the reserves to keep their mortgage up. And it's kind of terrifying, I guess if you haven't been bracing yourself for this, this is something that's kind of been top of mind. Like when would this happen again? And so we wanted to talk about if you are affected by this, if you are in a position where you're not able to pay your mortgage, what are somethings you can do?
Leisa Peterson (00:59): Yeah, and we were also talking about the fact that the mortgage lenders are bracing for the fact that there are going to be a lot of people, they're concerned about defaults and so they're trying to, I think, learn from what happened last time and not have all these people lose their houses. So kudos to, I think the mortgage lenders and especially Congress because I think that's what they're trying to make sure that they're helping people not lose everything because of coronavirus. So what we wanted to talk about was the fact that, but as part of the cares act, there was an adjustment made that if you have a conventional conforming loan backed by Fannie Mae or Freddie Mac, which typically is going to be like under I think four 20 I'm not sure the exact number, but you can find out pretty easily by talking to your servicer if you are not sure if you have a conventional loan. But if you have a jumbo loan for example, you may or may not qualify for this. So these would be loans that are like over 500,000 it depends on where you live. And there are certain numbers for certain geographic areas. Like it's higher in Hawaii and things
Naseema McElroy (02:14): and it's higher here. It's like over seven 50 here for a jumbo loan.
Leisa Peterson (02:18): Okay. For California. So yeah. So great. So just depends on where you live and making sure that you know what kind of loan you have. Because if you have a Fannie Mae or Freddie Mac loan, you are no matter what included in this, but you still have to reach out to your servicer and there's a couple of scenarios what they're explaining and we're looking at the resources and I know you're going to post the link so people can go and see for them themselves, but if you can pay your mortgage, pay your mortgage like just like our previous conversations, do not use this as a way to get like behind if you don't have to because it will create other headaches. It will take time and processing and if you can continue to please do, but if you can't pay your mortgage or you can only pay a portion of your mortgage, you would have to reach out to your loan servicer to set things up and kind of enlist this CARES act so that they know they you are going to be struggling and you're asking for what they're saying is up to first time request, 180 days of not having to make that payment.
Leisa Peterson (03:31): Now it's not like that payment goes away. You will have to pay it at some point in the future. It just might be added to the mortgage amount or you might pay a lump sum. And in the future like you're going to work with your servicer to decide how that's handled. But you can get the first request 180 day forbearance. So you don't have to make those payments. And, and I should say also it will only be the amount that's being paid for the mortgages. I have not seen anything about property taxes being deferred, for example. So if your payment includes insurance and your payment includes property taxes, you're still going to have to pay those portions. This is just the mortgage part, right? And if in 180 days, things are not better and you can't make your payment, you can ask for one extension.
Leisa Peterson (04:26): Yeah, for another hundred and 80 days. What also is helpful to know is you're not going to incur late fees. You're not going to have delinquencies reported to your credit reporting agencies and foreclosure and legal proceedings will not. They're going to be suspended until this gets resolved. But again, let's say you finding yourself in a situation where you can't do it for three months, but then you find that you, your income kicks back in and you've got the money, then you would contact them and go back to paying normal. You know? That's what the idea of it.
Naseema McElroy (05:04): Right? Right. And I think this just goes along with a lot of the things that we've been talking about is that don't ignore the fact that you can't pay your mortgages right now. Be as proactive as possible. Even if you're not suffering a job loss, you should have kind of like a backup plan, prepare for the day that you do so that hopefully it doesn't happen. Because my favorite saying is if you stay ready, you don't have to get ready. Just figure out who your loan services are, how to get in contact with them so that the day you find out that you're going to have a job cut or your ability to pay your mortgage is questionable. You reach out to them, do not delay. The thing that's going to hurt you the most is your delay in taking action and figuring out what you need to do to make sure that you protect your family's finances.
Naseema McElroy (05:52): And so these are some great resources that I love that they don't penalize. And that is not to your credit. It's also great to know that these people are being proactive in putting these things out there so people have some kind of like reprieve in this crisis. So the more you know you guys and things are changing every day, so make sure you check back in all ways to hear our timely discussions about what's going on right now in the current market. And then if you have any questions, make sure you send them to nursesonfirepodcast.com/ask anything else you want to add, Leisa ?
Leisa Peterson (06:32): I just want to say with these companies, from my experience having worked as a mortgage banker, you want everything in writing. Like if they say we're going to send you a letter that says that this is all been set up and you need to calendar yourself to look to see if that letter got sent. You know, maybe it's electronic and it's fast but don't like I'm guilty of this. So I know other people are where you get busy and you're like, I had that phone call. I know I told them and the letter never came. And then in reality they, they like didn't take care of it. You don't have a name. So just be paranoid. And when you're dealing with something like this where you know, we saw that 50,000 of these had already been offered through bank of America. Like it's totally possible that they could miss you and so make sure you have it in writing, you have confirmation it's been requested and that you keep in touch with them. You know, if anything were to seem weird, like always know that the responsibility falls to you not to the mortgage company and they have all the, the deck is stacked in their favor, not in your favor. And so hate to be paranoid, but this is what I've seen in the past where all of a sudden you're getting foreclosure notice and you're like, wait a minute, I thought this was all like this is serious stuff and I just don't want anyone to take it. I'm not in that
Naseema McElroy (07:58): seriousness. Yeah. And also thank you for reminding people that if things are impounded, like their property taxes and all that kind of stuff, they are still looking to get paid. So you still have to pay that deal through your mortgage company if that's how it's handled or reach out to your tax assessor's office to see how you can pay those things. But yeah, you have insurance and taxes that are impounded in your mortgage oftentimes. So make sure that those things are still getting paid because you don't want to jeopardize losing your house for oversize. So again, thank you so much, Leisa . This was some really good information, actionable, and I hope people find value from it. Thank you. Alright, thanks.
Hey there I’m Naseema
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