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70% of homeowners in forbearance didn’t need the help
Posted on 6/2/20 at 3:26 pm
Posted on 6/2/20 at 3:26 pm
LINK
quote:
Mortgage payment forbearance is a lifeline for homeowners who can’t pay their mortgage right now, but a surprisingly high percentage of borrowers who applied for and got forbearance say they didn’t need it.
Nationwide, 80% of homeowners who applied for forbearance under the CARES act were approved for it, buying at least three months of deferred mortgage payments.
A LendingTree survey of a small sample of 1,000 mortgage holders who are in forbearance found that only 5% of those approved for forbearance said they wouldn’t have been able to pay their mortgage without it. Another 26% said they could have paid the mortgage, but would have had to skip other bills.
3
Posted on 6/2/20 at 3:35 pm to JS87
I'm assuming in a lot of cases it made sense to get forbearance and pay off high interest debt with the money saved that month?
I don't know.
I don't know.
Posted on 6/2/20 at 3:39 pm to JS87
The fact that author thinks it is 'surprising' that people took advantage of that when they didn't 'need' to is the real story.
Posted on 6/2/20 at 3:48 pm to TheCaterpillar
quote:
I'm assuming in a lot of cases it made sense to get forbearance and pay off high interest debt with the money saved that month?
You do realize that on month 4 you have to pay the previous 3 months and that current month at one time? Only rarely does it get put on the backend of the mortgage unlike an auto loan. There was no benefit to doing this other than "just in case"
Posted on 6/2/20 at 7:17 pm to stout
quote:
You do realize that on month 4 you have to pay the previous 3 months and that current month at one time?
Not for Fannie and Freddie. And most lenders will look for other methods to cover the 3 deferred months rather than requiring it all at once
Posted on 6/2/20 at 7:37 pm to stout
quote:I did NOT know that. I bet I'm not the only one who didn't know it. Thankfully, I don't have a mortgage.
You do realize that on month 4 you have to pay the previous 3 months and that current month at one time?
There are going to be some really surprised homeowners when that jumbo payment comes due.
Posted on 6/2/20 at 10:09 pm to stout
There are 3 options in general. At the end of forbearance you pay everything you missed at once. If not able to do that then the next option is to go on some sort of payment plan to payoff the missed payments. The last option is to tack on the missing months to the end of the loan. I suspect most people will choose option 3. If you truly needed to skip payments due to job loss etc... then you're probably not going to be able to pay 3-6 months of payments all at once while either starting a new job or coming back from being laid off. A payment plan might be tough as well.
Having said all of that the banks prefer you pay it back all at once and will push that first but the reality is that wont happen for most and if the banks were to make that the only option and a lot of people walked away from their homes the banks would be screwed because they would all of the sudden own tens of thousands of houses that they would end up unloading for a loss. It would be 2009-2013 all over again. No way they let that happen. The FED can't bailout the banks again. They'll tack on months thru mortgage modification to keep these people in their homes and be done with it. Collectively the amount of people in forbearance is too big to fail.
Having said all of that the banks prefer you pay it back all at once and will push that first but the reality is that wont happen for most and if the banks were to make that the only option and a lot of people walked away from their homes the banks would be screwed because they would all of the sudden own tens of thousands of houses that they would end up unloading for a loss. It would be 2009-2013 all over again. No way they let that happen. The FED can't bailout the banks again. They'll tack on months thru mortgage modification to keep these people in their homes and be done with it. Collectively the amount of people in forbearance is too big to fail.
This post was edited on 6/2/20 at 10:17 pm
Posted on 6/2/20 at 10:14 pm to JS87
We got it on all properties right when this shite hit, just in case, but never stopped paying. It's a smart thing to do or at least was for us.
Posted on 6/2/20 at 10:23 pm to fillmoregandt
Yes it was for most Fannie and Freddie. Borrowers will have to qualify for it to have the payments deferred with proof of documents and loads of paper work. And as the title suggests many people who took the forbearance will not fall under that guise
Posted on 6/2/20 at 11:47 pm to fillmoregandt
quote:
Not for Fannie and Freddie. And most lenders will look for other methods to cover the 3 deferred months rather than requiring it all at once
Yes but...
quote:
So, most of this is old news. Why is it so serious today? Glad you asked. You see, while homeowners will have the ability to skate — more on that in a moment — no one else does. Firms like New Residential, Caliber, Quicken Loans — you name it — must still make the monthly payments to the end mortgage holder or fund. And most of these firms have neither the ability to pay nor are capitalized at such a level as to shop their debt. And it gets far worse as these firms are now outright lying and threatening homeowners in order to pull their own fat out of the fryer. Here is how David Dayan, at the American Prospect put it in an article entitled, Unsanitized: Mortgage Servicers Trying To Steal Homes, Again,
So when I started hearing from borrowers that they were being told that they could apply for three months forbearance (a deferment of their loan payment), but would have to pay all three months back at the end of the period, my ears pricked up. Others have heard this as well, like this Wall Street Journal reporter and Lisa Epstein, one of the subjects of my book Chain of Title, who writes for a subscription-based website called The Capitol Forum. Both found AmeriHome Mortgage, a private equity-backed firm, telling customers about a lump-sum payment immediately due at the end of three months, and this isn’t limited to them. (I’ve heard from Wells Fargo customers as well.
Even the telephone script which Freddie Mac has published spells this out. Homeowners are allowed 6 months with an additional six months, if necessary. Second, there is no legal mandate for an immediate payment upon the lifting of the moratorium as Industry pundits like Dave Stevens would like to infer. Stevens, a seven year MBA President and former FHA Commissioner is at loggerheads with the current FHA Commissioner Mark Calabria. Foreclosurepedia covered this, in depth, in April. Calabria recognizes that the casino which Stevens has overseen, for decades, is crashing down. The reality is that Stevens and his pack of ranging mongrels proved Chicken Little right. Stevens is demanding to stick his and the collective MSR nose at the public funds trough because of his impotence and inability to get their shite straight. It is a Come to Jesus moment for them; the reality is that there is No Room At The Inn and the Manger is preoccupied with a legitimate need. And it gets better because the reality is that nobody on the MSR side of things wants loan modification or assistance to the homeowner. Why? It has been well known, for over eleven years, that servicers make FAR MORE MONEY on a foreclosure!
TLDR: There's a shite show inbound.
Posted on 6/3/20 at 5:52 am to stout
Again, technically speaking, the loan is contractually due for 3 payments at the end of the forbearance, but there are loss mitigation options available for most loans to avoid a lump sum payment primarily repayment plans or loan modifications
Eta: got a link to that last article?
Eta: got a link to that last article?
This post was edited on 6/3/20 at 5:56 am
Posted on 6/3/20 at 11:04 am to fillmoregandt
quote:
Eta: got a link to that last article?
LINK HERE
I see why he TLDR'd it- it's a long article. Interesting, though.
Posted on 6/3/20 at 11:08 am to DallasTiger45
quote:
I see why he TLDR'd it- it's a long article.
That and the guy can be kind of a nutcase and that turns people off that may not know who he is. He follows the industry closely, though. He is usually in the know on a lot of things.
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