These mortgages forbearances are a joke!

[WannabeWealthy]

So contacted Mr. Cooper (who ever heard of this mortgage company) to see about a forbearance on my mortgage for about 6 months hoping they would extend the loan out 6 months - 1year.  But noooo.. that's not what they do.  They tell you that you can delay payments, but at the end of the period, you have to pay back ALL the money that you didn't pay.  What kind of deal is that?  LOL!  I laughed at them and immediately applied to Wells Fargo to refinance the home.

[raeoflyte]

All mortgage forbearance works that way.

[justme]

I'm pretty sure Wells Fargo isn't going to be any better. Plus if you truly need the forbearance you might not be able to get it refied. 

[Peace77]

The problem is that you asked for a forbearance when you really wanted a deferment.
Forbearance is asking the lender to "bear with me" and give me more time to pay.
A deferment allows you to skip 1, 2 or perhaps 3 payments and add them to the end of the loan.

[TheHaitian]

May 23, 2020 23:32:45 GMT -5 Peace77 said:

The problem is that you asked for a forbearance when you really wanted a deferment.
Forbearance is asking the lender to "bear with me" and give me more time to pay.
A deferment allows you to skip 1, 2 or perhaps 3 payments and add them to the end of the loan.

Basically what she said!

Our mortgage is with Wells Fargo and we were contemplating moving this summer (so selling the house) for my wife to start her PhD program in upstate NY.

So figured I had nothing to lose and went with it. Right when you login to Wells Fargo there is the message if you need payment relief due to Covid. Click on it and it ask me which account I need help with : mortgage or credit card. Click on mortgage and then click that I agree to the terms and it was done.

Basically I missed so far 2 payments (money in a separate account in case I don’t like their terms or change my mind) and June will be the last one. I already received papers that my mortgage will go up in July to make up for the escrow shortage or I can make 1 payment to cover the $800 shortage (was expecting that). Now what they do is those 3 months I missed I have the following options:
- pay them all at once
- they basically add them to the back of the loan. If I live here for 30 years my mortgage was set to be gone in July 2046 but will be October 2046

And just in case I also received more paperwork in case I cannot re-start my payments in July and I can apply for a :
-‘forbearance which you have
- assistance program
- loan modification

I was hoping senate would have voted on the bill already and I can get another 3 months deferment and throw that money towards other debt.

[bobosensei]

According to Clark Howard (a national consumer protection figure) forbearance has changed a little but mortgage servicers aren't required to tell you all the options until July or something.  Or maybe it is that they aren't required to have trained all their employees on the options until then.  But they are supposed to have to work with you on making the payments now instead of demanding all the money along with the current payment at the end of the forbearance period.

Since it looks like my mortgage refi is in the trash due to my unemployment I'll probably call for forbearance after my June payment happens.  My thought is even if I owe all the money at the end of the period that I can pull from my brokerage account at that time instead of having to drain it regularly right now when the value is down.  My goal will still be to secure employment and finish my refinance, but if I'm out of work for a while the only way I can make it on regular unemployment of 365 a week is if I don't have the mortgage to deal with.

[Deleted]

WannabeWealthy - If you don't need to quit paying your bills, just pay them.  All this defer for the hell of it just because it's being offered is going to end up biting people in the ass.  

[Deleted]

May 24, 2020 13:38:33 GMT -5 minnesotapaintlady said:

WannabeWealthy - If you don't need to quit paying your bills, just pay them.  All this defer for the hell of it just because it's being offered is going to end up biting people in the ass.  

I agree.  For one thing, it isn't simply "defer 3 months and add 3 months to the end of the loan" unless they are waiving interest, which I doubt.  Even at a low interest rate, it is going to be more than 3 payments.  I don't know TheHaitian's interest rate or monthly payment, but let's assume $1800 x 3 @ 3.5%.  So he would be deferring $5400 for 26 years (until 2046, he said.)  The Phil script says that will be $10,744.86 tacked on at the end.  That's about twice those 3 payments.

Another thing is that we don't know the effect that the present economy is going to have on housing prices.  So your home could be worth significantly less soon.  If wages also get deflated, it could become almost impossible to get out.

And Carl brought up escrow.  What happens with escrow if you go into deferment?  Are you continuing to pay it?  Or will they hit you up with an even larger escrow shortage bill next year, driving your payment higher and higher?

I can see why someone who is unemployed would want to take this opportunity to hoard some cash.  But to do it just because . . . ?  The bank asked if you needed relief because of the covid-virus.  If you are still employed and your wages haven't been cut, why again do you need it?  

[TheHaitian]

May 24, 2020 13:54:16 GMT -5 @bamafan1954 said:

May 24, 2020 13:38:33 GMT -5 minnesotapaintlady said:

WannabeWealthy - If you don't need to quit paying your bills, just pay them.  All this defer for the hell of it just because it's being offered is going to end up biting people in the ass.  

I agree.  For one thing, it isn't simply "defer 3 months and add 3 months to the end of the loan" unless they are waiving interest, which I doubt.  Even at a low interest rate, it is going to be more than 3 payments.  I don't know TheHaitian's interest rate or monthly payment, but let's assume $1800 x 3 @ 3.5%.  So he would be deferring $5400 for 26 years (until 2046, he said.)  The Phil script says that will be $10,744.86 tacked on at the end.  That's about twice those 3 payments.

Another thing is that we don't know the effect that the present economy is going to have on housing prices.  So your home could be worth significantly less soon.  If wages also get deflated, it could become almost impossible to get out.

And Carl brought up escrow.  What happens with escrow if you go into deferment?  Are you continuing to pay it?  Or will they hit you up with an even larger escrow shortage bill next year, driving your payment higher and higher?

I can see why someone who is unemployed would want to take this opportunity to hoard some cash.  But to do it just because . . . ?  The bank asked if you needed relief because of the covid-virus.  If you are still employed and your wages haven't been cut, why again do you need it?  

A few things:

The math is wrong, you are deferring the payments for 3 months, not 26
Also that would require the person keep the loan for the whole 30 years, average loan term have been 7 (either switching to lower rates, moving/selling etc).
—> second even if they kept the loan over 26 years remember the benefits of a mortgage : you keep your payments fixed over 30 years (except for insurance and property taxes). So you would not be tackling 10k towards the end of the loan.

Second that is not how escrow works. Escrow are very tightly controlled and they cannot keep in your escrow account more than you need to cover expenses + a little extra (forgot exactly how much). Anymore than that they refund it to you.

Also all shortages should be covered within 1 years (that is why they offer you either a lump sum payment or a 12 months increase payments). Escrow pays for : PMI if you have it, mortgage insurance and property taxes. The only way one escrow would be see a huge increase 2 years in a row would be if your insurance and property taxes Increase considerably and I would look into those.

Either way OP do what works for you. For me that is planning on selling within the next year or refinance, the math made sense.

[Deleted]

May 25, 2020 15:08:12 GMT -5 TheHaitian said:

May 24, 2020 13:54:16 GMT -5 @bamafan1954 said:

I agree.  For one thing, it isn't simply "defer 3 months and add 3 months to the end of the loan" unless they are waiving interest, which I doubt.  Even at a low interest rate, it is going to be more than 3 payments.  I don't know TheHaitian 's interest rate or monthly payment, but let's assume $1800 x 3 @ 3.5%.  So he would be deferring $5400 for 26 years (until 2046, he said.)  The Phil script says that will be $10,744.86 tacked on at the end.  That's about twice those 3 payments.

Another thing is that we don't know the effect that the present economy is going to have on housing prices.  So your home could be worth significantly less soon.  If wages also get deflated, it could become almost impossible to get out.

And Carl brought up escrow.  What happens with escrow if you go into deferment?  Are you continuing to pay it?  Or will they hit you up with an even larger escrow shortage bill next year, driving your payment higher and higher?

I can see why someone who is unemployed would want to take this opportunity to hoard some cash.  But to do it just because . . . ?  The bank asked if you needed relief because of the covid-virus.  If you are still employed and your wages haven't been cut, why again do you need it?  

A few things:

The math is wrong, you are deferring the payments for 3 months, not 26
Also that would require the person keep the loan for the whole 30 years, average loan term have been 7 (either switching to lower rates, moving/selling etc).
—> second even if they kept the loan over 26 years remember the benefits of a mortgage : you keep your payments fixed over 30 years (except for insurance and property taxes). So you would not be tackling 10k towards the end of the loan.

Second that is not how escrow works. Escrow are very tightly controlled and they cannot keep in your escrow account more than you need to cover expenses + a little extra (forgot exactly how much). Anymore than that they refund it to you.

Also all shortages should be covered within 1 years (that is why they offer you either a lump sum payment or a 12 months increase payments). Escrow pays for : PMI if you have it, mortgage insurance and property taxes. The only way one escrow would be see a huge increase 2 years in a row would be if your insurance and property taxes Increase considerably and I would look into those.

Either way OP do what works for you. For me that is planning on selling within the next year or refinance, the math made sense.

You are the one who said this:

Now what they do is those 3 months I missed I have the following options:

- pay them all at once

- they basically add them to the back of the loan. If I live here for 30 years my mortgage was set to be gone in July 2046 but will be October 2046

So if you kept the house you live in and deferred it to the back end of the loan, you are deferring them for 26 years.  Those are big if's.  You plan on selling so it may be the right move for you.

But you didn't really answer the escrow question.  While you are in deferment, are you still making a payment for escrow?  That is part of the house payment I submit every month.  It may not be part of yours, but you mentioned escrow shortage so it sounded like it is. Unless you are submitting a payment for escrow while deferring the principal/interest, you will be short.  How can you not be if you aren't paying it?

If it makes sense to you, do it.  I just see some potential downside.

[Rukh O'Rorke]

I didn't even know you could do this unless you lost your job!

I will just keep paying as usual. Maybe I'm a dummy, but like Susana said - could just be digging yourself a bigger hole down the road.

Did banks offer this kind of thing before covid if you lost your income unexpectedly? Or is it only for the pandemic?

[justme]

May 24, 2020 13:38:33 GMT -5 minnesotapaintlady said:

WannabeWealthy - If you don't need to quit paying your bills, just pay them.  All this defer for the hell of it just because it's being offered is going to end up biting people in the ass.  

I read an article where they surveyed those choosing forbearance and the vast majority said they didn't actually need it.

[Peace77]

We signed up for forbearance as soon as I realized that my husband's income would be less due to COVID 19.  He can't get unemployment since he didn't have regular or set hours to start with.  

[raeoflyte]

May 25, 2020 23:04:33 GMT -5 Peace77 said:

We signed up for forbearance as soon as I realized that my husband's income would be less due to COVID 19.  He can't get unemployment since he didn't have regular or set hours to start with.  

Please be careful with it. I know there are times that it's the only option, but at the end of the forbearance you have to pay all missed payments. If you can't, then you have to apply for a modification, and everything is reported to the credit bureaus that can affect your ability to refinance or get a new mortgage. There's no way of knowing how these will be treated 12 to 24 months down the road. Good luck.

[Deleted]

[souldoubt]

Everything I've heard or read has been about forbearance which as others have stated means any missed or skipped payments are all due after the forbearance period.  To each their own but I would only be trying to take advantage if my situation warranted it and not just because it may be an option given the current circumstances others find themselves in.  Unless anyone doing it specifically sets that money aside each month and doesn't touch it they're playing with fire.  If you find yourself out of a job, with reduced hours or something else in so many months that impacts your situation then you may not be able to make the payment and I'm not sure how likely another forbearance is.

[Peace77]

May 26, 2020 9:56:52 GMT -5 raeoflyte said:

May 25, 2020 23:04:33 GMT -5 Peace77 said:

We signed up for forbearance as soon as I realized that my husband's income would be less due to COVID 19.  He can't get unemployment since he didn't have regular or set hours to start with.  

Please be careful with it. I know there are times that it's the only option, but at the end of the forbearance you have to pay all missed payments. If you can't, then you have to apply for a modification, and everything is reported to the credit bureaus that can affect your ability to refinance or get a new mortgage. There's no way of knowing how these will be treated 12 to 24 months down the road. Good luck.

I'm aware.   I made a partial payment and will make up the rest before the deadline.

[HoneyBBQ]

You're not going to be able to refi if you miss any payments or have a decrease in income (most likely).

[WannabeWealthy]

May 24, 2020 13:38:33 GMT -5 minnesotapaintlady said:

WannabeWealthy - If you don't need to quit paying your bills, just pay them.  All this defer for the hell of it just because it's being offered is going to end up biting people in the ass.  

I don't need it and won't be applying.  I was just curious if it would be an option.

I've since refi'd with Wells Fargo.  I close next month and I'll have July as a free month which is a blessing since I need to build up more reserves of cash in my checking account.  My refi went from 5% to 3.125% and a savings of about $400/month.  I'm so glad that I was able to get it this low.