DFI URGES HOMEOWNERS WITH FORBEARANCE PLANS TO WORK WITH SERVICERS NOW TO CREATE A PAYMENT PLAN ONCE FORBEARANCES END

Guidance to mortgage servicers urging them to work with homeowners to avoid foreclosure extended

Olympia – Recognizing that new federal stimulus relief may be forthcoming, any checks are going to take time to reach Americans, and the Washington State Department of Financial Institutions urges homeowners to make sure they understand their forbearance and other foreclosure prevention options prior to expiration.

“Communicating with your mortgage servicer prior to the end of your forbearance period is crucial. Mortgage servicers are processing millions of forbearances, it’s so important to start communicating with your servicer sooner than later,” DFI Division of Consumer Services Director Lucinda Fazio said. “Make sure you get agreements in writing, read them thoroughly and make sure you understand what you’ve agreed to and what your mortgage servicer expects of you after your forbearance ends.”

If you need help understanding the language used in your mortgage documents, the Washington Homeownership Resource Center offers resources to help you do that at http://www.homeownership-wa.org/managing-your-mortgage.

Homeowners impacted by COVID-19 who have Federal Housing Administration (FHA) mortgages have until Feb. 28, 2021 to request an initial forbearance (FHA Extends Options for Single Family Borrowers Financially Impacted by COVID-19 | HUD.gov / U.S. Department of Housing and Urban Development (HUD)). The federal eviction and foreclosure moratorium also is extended until Feb. 28, 2021.

It’s important for homeowners to understand forbearance is not forgiveness; the missed payments must be paid at some point in time. If you obtained a 180-day forbearance under the CARES Act, make sure you know when it ends, if you are eligible for a second 180-day forbearance, and what your repayment plan is. There are many repayment options available to homeowners, depending on who your lender/servicer is, what type of loan you have and what your income situation is. It’s imperative homeowners know if their missed mortgage payments will be added to the end of your loan, dispersed among future payments or be required as a lump sum once payments resume. If you are not able to resume payments at the time your forbearance ends, you still may be able to enter into a loan modification with your mortgage servicer, but you should start those discussions before your forbearance period ends.

The Consumer Financial Protection Bureau (CFPB) created a video to help homeowners understand more about forbearances: https://www.youtube.com/watch?v=M9aRKYvSe-Q&feature=youtu.be. The CFPB web site https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/  and DFI’s web site https://dfi.wa.gov/homeownership/ provide additional information on foreclosure prevention options available to homeowners.

DFI’s Division of Consumer Services today extended through February 2021 the guidance for licensee mortgage servicers, requesting they work with homeowners by:

  • Forbearing mortgage payments;
  • Refraining from reporting late payments to credit rating agencies;
  • Offering mortgagors additional time to complete trial loan modifications, and ensuring that late payments during the COVID-19 pandemic does not affect their ability to obtain permanent loan modifications;
  • Waiving late payment fees and any online payment fees;
  • Postponing foreclosures;
  • Ensuring that mortgagors do not experience a disruption of service if the mortgage servicer closes its office, including making available other avenues for mortgagors to continue to manage their accounts and to make inquiries; and
  • Proactively reaching out to mortgagors via app announcements, text, email or otherwise to explain the assistance being offered to mortgagors.

“Regardless of what relief the federal agencies do or don’t provide for homeowners, it is our hope that our licensees will continue to work with Washington homeowners  - as they have throughout this pandemic – to avoid foreclosures,” DFI Director Charlie Clark said. “While vaccinations are being rolled out, we still are several months away from many Washington residents being able to get back on their feet financially, and it’s more important than ever that we keep Washington residents in their homes if at all possible.”

Homeowners with concerns about their ability to make their payments after their forbearance, facing foreclosure when the federal and state moratoriums expire or having difficulty reaching their servicer should contact DFI’s Mortgage Assistance Team at 1-877-RING-DFI (746-4334) or the Washington Foreclosure Hotline at 1-877-894-HOME (4663) for access to free foreclosure prevention counseling. Additional information is available in multiple languages at https://dfi.wa.gov/coronavirus/resource-sheets.

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