COVID Mortgage Forbearance

Through government-sponsored forbearance programs, 12% or more of U.S. homeowners were able to pause their mortgage payments during the pandemic. As of May 2021, 2.2 million of those homeowners still owed money from the pause, according to a survey by the New York Fed. Of those, 2.9% are expected to face delinquency and possible foreclosure.

Many of these 2.2 million homeowners face getting lump-sum demands or receiving notice that their monthly payment has been adjusted skyward to account for the months they were allowed to skip their obligation during the pandemic.

If you are one of those who receive this type of shock in the mail, contact us at Stecklein & Rapp (formerly Consumer Legal Clinic, LLC) to help you resolve the situation. We have been dealing with consumer debt issues for more than two decades and serve clients in the Greater Kansas City area on either side of the Kansas and Missouri state line, as well as Lincoln, Nebraska.

What Is COVID Mortgage Forbearance?

In the face of the COVID-19 pandemic in March 2020, the federal government launched forbearance programs, allowing homeowners to take a pause in making their monthly payments. The programs covered only those borrowers with loans backed by HUD/FHA, USDA, VA, or Freddie Mac and Fannie Mae. Private mortgages were not covered.

Forbearance was one of the many relief measures contained in the Coronavirus Aid, Relief and Economic Security (CARES) Act. The CARES Act provides for initial payment pauses of three to six months, with a possible extension of up to 12 months (18 for some early applicants). The FHA, USDA, and VA programs are still available through September 30, 2021. Fannie Mae and Freddie Mac have not set a deadline.

In the early months of the pandemic, some 12% of all homeowners took advantage of the program. To date, 70% of those who sought forbearance have settled their accounts. Those remaining, however, might face difficulties in navigating their exit, as the experience of others has shown.

How Repayment is Handled

Forbearance was never meant to forgive payment for the months skipped, but many who entered the program believed the payments would just be added to the end of their overall mortgage period of 30 years or whatever their term was.

That is not always what happens. Just ask Utah homeowner Katherine Cwik, whose townhouse costs her roughly $900 a month in mortgage payments. In March 2020, she took unpaid leave from her airline industry job due to the pandemic and applied for mortgage relief for three months.

When the three months ended, she made her normal payment but received notice from her bank that she owed $4,693 in a lump-sum makeup payment — more than $1,400 more than the payments she skipped. 

It then took her two weeks of haggling before she was given the unacceptable option of a payment deferral that would result in her monthly mortgage amount rising to $1,610. After still more nightmares on the phone, she was able to resolve the situation and make a lump-sum payment equivalent to three months of normal payments.

Greg Pupecki of Beach Park, Illinois, had a similar shock when the lender for his FHA-backed mortgage sent him a notice demanding immediate payment of $12,476 “to bring your loan current.” Greg’s problem arose when his original lender, Chase Bank, sold his loan to Midland Mortgage of Oklahoma City.

Thanks to intervention by the Chicago Sun-Times, Midland Bank offered to adhere to the original terms of forbearance as spelled out in the CARES Act and associated regulations and to add the paused payments to the end of the loan.

Repayment Options

According to the Consumer Financial Protection Bureau (CFPB), those who take advantage of mortgage forbearance should have four options for repayment:

  • Monthly Repayment: This option increases your monthly payment over the life of your loan to account for the monthly payments you skipped.
  • Deferral: This option moves your skipped payments to the end of your mortgage repayment period, essentially extending the length of your loan.
  • Modification: If you can no longer afford your monthly payment, you can seek a modification that will lower the payment but extend the loan to cover skipped and future payments owed.
  • Reinstatement: You make a lump-sum payment and everything returns to normal.

How Our Team at
Stecklein & Rapp Can Help

As you can see from the examples above, these forbearance matters do not always pan out smoothly. Banks can make demands you aren’t expecting or even dig in their heels on one option, such as demanding a lump sum to settle your account.

The CFPB is well aware of this situation. In March 2021, it received a record 34,000 complaints about banks’ handling of mortgage forbearance. Complaints abounded about unclear and confusing communication from the lenders and about delays and denials of loan modifications.

If you’re having trouble resolving and exiting from your mortgage forbearance plan, contact us immediately at Stecklein & Rapp. We help consumers with debt problems and with banks that refuse to negotiate and throw up unnecessary barriers to resolution. We proudly assist consumers in Kansas City, Kansas, and Kansas City, Missouri — as well as in Lincoln, Nebraska.


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