Industry sign banking oregon forbearance agreement mobile
you're listening to Seattle real estate podcast hey everybody I'm Sean Reynolds the owner of summer properties Northwest Reynolds of Klein appraisal and your host for this episode of the Seattle real estate podcast I think it was maybe four or five podcasts ago I went through and kind of talked about what would happen for tenants if they weren't able to pay the rent what their options were what they should do how they should interact with their landlord kind of went through all the different processes there and really kind of spelled that out and so what I wanted to do on this podcast was to basically go through if you are if you have lost your job due to the corona virus and you have a mortgage and you are gonna be late on that mortgage or you can't pay it we've all heard the words forbearance what does forbearance actually mean and what does it do is forbearance a good option if you don't have the money to pay your mortgage right now so that's what we're gonna do on this podcast so let's jump right on in and some of the things to do and some of the reasons I'm doing this are number one I think there's a lot of people who are unemployed out there who are really scrambling to figure out which bills they pay and how do they pay those and maybe forbearance is a word that they've heard of but from my standpoint as a real estate broker and I own an appraisal company and I've got appraisers out there appraising during this crisis is that we're getting a lot of feedback of loan programs are changing on the summit side we're getting denied loans at the very end because mortgage originators are placing what they call overlays and it's additional criteria on loans I think you're gonna see a time period here where it's pretty rocky as far as what's going on with mortgage lending I know a lot of lenders have stopped doing jumbo loans at all and that's with a loan with a loan amount I think over 740 1000 is the max before you get into a jumbo loan so you know three quarters of a million dollars and up is a jumbo loan a lot of lenders have basically stopped doing those all together and I know credit scores have gone up and maybe come down a little bit for some of the FHA VA and USDA loans so there's a lot of different things going on out they're kind of behind the scenes that we're seeing the impact of but I think are gonna come back they're gonna come out kind of in the media and come out in the news and for a lot of people in real estate it's gonna come out in yep my buyer couldn't get a loan or my seller the deal they entered into that deal blew up because the buyer couldn't get a loan those kind of things and we see this a lot when we're in these transitionary periods of we're trying to get the federal stimulus into the economy that's hard to do because it's such a massive project and there's so much money that needs to go into an economy especially when you've been shut down just boom done all of a sudden you shut all these companies down nobody has any money coming in nobody has any income but the bills are still piling up so that's what we're gonna kind of jump into today and I'm gonna go through a guide to the coronavirus mortgage relief options you know with the corona virus protection with a package that go that goes through you just don't have to make you're painting your mortgage payment you just don't have to make it those are things that I'm kind of hearing thrown out around out there and those are the reasons that I want to do these podcasts on these specific type events which I think affect a lot of people and will continue to affect a lot of people today is Wednesday April the 8th I believe and tomorrow's Thursday so Thursday is another unemployment numbers reporting so we're gonna I think see those numbers go go up I don't think they're going down in the last two weeks we've had 10 million people apply for for unemployment for the first time and I think you're gonna see a massive number tomorrow so going in to payments being made on May 1 you're gonna have a lot of people that if they don't have the federal relief in their their pockets from whatever that it's gonna be a tough time to make mortgage payments and I think a lot of people are gonna look at the forbearance option of basically putting your payment on a hiatus and we're gonna talk about that but first let's talk about how the mortgage market works and this is an article that was written by Barry Habib and Dan Habib mortgage crisis and fed unintended consequences and I'm kind of pulling Peart and certain pieces of this and Barry biebe does the mortgage MBS highway and he kind of explains to and runs an online YouTube channel and basically an online service for people in the mortgage industry and I rely upon the expertise there a lot so let's begin with the mortgage process this is just gonna be kind of a quick rundown and how all this works so that once I explain this you'll have an idea of why all these things are so kind of tied together and when you do one thing like don't pay a mortgage how it affects all the other things so a borrower or a buyer goes to a mortgage originator like somebody to get them loan from to obtain a mortgage once closed the loan is handled by a servicer which may or may not be the same company that originated the loan the borrower submits payments to the servicer however the servicer does not own the loan they are simply maintaining the loan so think so think of the servicer as the person that you write your payment's out to they might own your loan but more than likely you're just writing your payment's out to them and they handle the rest this means that the servicer is servicing loan this means collecting payments and forwarding them to the investor paying taxes and insurance answering questions etc and while they maintain or service the loan the asset itself is owned by an aggregator or it's directly owned by a governmental agency like Fannie Mae Freddie Mac or Ginnie Mae Ginnie Mae does va and FHA loans loan gets placed inside a large bundle which is put in the hands of an investment banker everybody loves investment bankers right they just get such a bad rap but they are really required to hand all this stuff the loan gets placed inside a large bundle which is put in the hands of an investment banker that's where we're at that investment banker converts those Lund loans into a mortgage-backed security that can be sold to the public so that's how you buy a home got a loan your loan gets serviced your payment's go to that service or that servicer they make the payments to the investor and the in that all gets happen happens through mortgage backed securities that can be sold to the public that's how you get liquidity that way the lender can go out and do another loan so there's a formalized process for all this to happen so the investment maker converts those loans into a mortgage-backed security that can be sold to the public this shows up in different investments like mutual funds insurance fund and plans and retirement accounts so that is a super short version of how the mortgage process works so here's where with the coronavirus we go sideways but the coronavirus has caused a virtual shutdown of the US economy which has created an unprecedented amount of job losses that's why I'm talking about job losses people who can't make their mortgage payments this adds a new risk to the servicer because borrowers may have difficulty paying their mortgages in a timely manner yeah that's true and although the servicer does not own the asset they have the responsibility and the legal obligation to make the payment to the investor so the servicer is the guy in the middle that you make your payments to you often think of that person as the person who owns your mortgage but they are typically not they're just the servicer they're just passing on the money that you give them to the person and they keep a little bit as there is their profit and although the servicer does not own the asset they have the responsibility to make the payment to the investor even if they have not yet received it from the borrower so these servicers are getting caught and one of the one of the articles I read and doing research for this podcast was this is from the Mortgage Bankers Association in the Federal Reserve Chairman and they're stating that if approximately 1/4 of borrowers avail themselves of forbearance not having to pay their mortgage for six months or longer advancing demands on servicers has exceed seventy five billion dollars or could climb well above a hundred billion dollars they're just kind of make taking guesses but it's a big deal and you're gonna probably depending on how many people apply for forbearance from their lenders depending on how that goes how fast the funds get out the federal funds from the stimulus package you get out people are going to be requiring forbearance they're gonna take that as an option and I think the mortgage industry is probably going to need to bail out too they haven't been named so far but I don't think there's any way that you're gonna avoid seeing that and there are some steps in place to take care of the mortgage industry but not quite sure how to to handle that so mortgage lenders are tightening standards as the coronavirus crisis and crisis worsens so if you are a real estate broker and you've got a deal in the works get that deal closed as soon as you can because lending standards are changing and I think there's a lot of lenders who are gonna be exiting the mortgage industry they're gonna say yeah with all these people without jobs we can't really confirm if they have jobs or if their employment moving forward we just don't want to deal with that we're out we're out of the mortgage lending industry I think you're gonna see a ton of that especially short-term from the last few recessions especially the last one when in 2007 2008 when that one hit we didn't really have the forbearance option that's the big difference between that recession and this what I'm calling recession that's gonna happen is that on this one as part of the cares Act there have been placed right off the get right off the bat right off the get-go mortgage forbearance and I think that's because we learned from the last one that it's way cheaper to work with existing borrowers than - and and have them spread out the payments get them to do something as far as their mortgage whether they do a forbearance or spread it out over more years get them to do something instead of going down the route of foreclosure foreclosure is not a win situation for anybody everybody loses money on that and the homeowner loses their home so going down the four-band road is an option that on in with the coronavirus that's what we're looking at so let's get into what the forbearance looks like yeah and in the government's effort to help those who have lost their jobs because of the coronavirus shutdown they have granted forbearance of mortgage payments for affected individuals we knew that going into it this presents an enormous obstacle for servicers who oblah gated afford the mortgage payment to the investor even though they have not received it received it yet fortunately there is new facility set up to help mortgage servicers bridge the gap to the investor however it's unclear as to how long it will take for servicers to access this facility so if you got mortgage people hoping for a program that comes out some mechanism that helps them out in the meantime you've got homeowners who can't pay you've got lenders who don't have money coming in you've got businesses they don't have money to run payroll this is all mess and it's gonna take a while to sort out and that's if it gets sorted out I think a lot of this stuff will just kind of happen might happen too late businesses are gonna go under and people are gonna have a tough time paying their mortgages and they're already having a tough time paying their rent so these are all things that we were just kind of have to work our way through there's no other option and do I focus on the negative on this podcast I try not to but a lot of this stuff is it's not easy stuff to wrap your head around and it's it's not particularly easy for me to talk about either because it's always focusing on well how do you work around this issue and that's what I've tried to do with the Seattle real estate podcast during this downturn is not to give you fluffy you know news feeds hey it's gonna be great it's gonna be ok I've tried to give you my calls is what I think is happening with a guy who runs a couple of small businesses that are in real estate and real estate appraisal and what I'm seeing out there so with some of these podcasts it might seem that I'm like really going down a negative rabbit hole but I'm not I'm doing my best to bring you the news of what I think is happening how it affects you and give you my professional opinion so let's jump into a guide to coronavirus mortgage relief options and this is coming from the Consumer Financial Protection Bureau I thought they had a really good website and some really good advice is if you are looking down the barrel of not being able to make your mortgage maybe it's a matter of keeping your utilities on eating whatever versus making that big mortgage payment because even if you get a $1,200 check and maybe another $600 stimulus and you've got a mortgage a lot of areas that is not going to cover your mortgage and another thing I'm hearing about is people who are reaching out to their lenders which I'll get into in a second who are reaching out to their lenders for for bands for parents the lender is saying yep we'll give you three months this is what's happening we'll give you three months but when that fourth mortgage payment is due we need all four months paid upfront so it's basically a lump sum payment it's a balloon payment and if you haven't had a job if you don't have a job now and maybe you get your job back a couple of months down the road you're already behind on a ton of bills so the option to make four payments after three months doesn't seem to me like a very fair option but I think homeowners are going well let's buy some time we'll enter into that forbearance agreement we'll buy some time and we'll figure it out later and I think you're gonna have probably some intervention there and you're gonna have some changes to policy because it doesn't make any sense to say all right yep we'll give you three months but man on that fourth month you owe for the fourth month in addition to you got to come up with those other three payments as well so give us four months of payments as of XYZ date that doesn't seem to me like a very good solution that is just a recipe for making this way worse because people are not gonna have that money by then it's going the other way it's not it's people are not just coming into a bunch of money they're burning money with no jobs and that's that's a terrifying scenario to be in so that's why we are working on mortgage forbearance here so for many homeowners with mortgages there's help but first assess your situation these are important things you need to know first the number one thing and this is what I really agree with if you can pay your mortgage pay your mortgage bottom line you signed up for a contract you gave your word in writing that you would pay this mortgage now if you can keep paying it don't screw around with this if you have that ability don't make it worse for everybody else and for the industry by just kind of taking up forbearance that's one of the major complaints about this is that people can basically call up Fannie Mae and Freddie bear Act mortgage if their mortgages owned by Freddie by governmental entity they can call up and say yep as part of the cares package I want to get a forbearance what's that look like and that's without proving that they need this so in the last recession in Oh 708 you had to go through a pretty good-sized criteria you had to provide bank statements showing that you were in need you had to prove that you lost your job whatever whatever you had come up with some paper that backed up your claims in in this one I think the government was so quick to say oh my gosh we're gonna put all these people out of work we know that l
t's give them the right to not make their payments on you know half of these loans because that's about what the governmental service entities they own about half of all the residential loans out there so let's make it easy for them to get a forbearance if people don't freak out and get foreclosed on so if you can pay your mortgage pay your mortgage don't call your mortgage servicer if you aren't facing an immediate issue those guys are wildly busy and you might be on hold for a long time just trying to get all to your servicer so have patience stick with it if you really need a forbearance you will get it alright if you can't pay your mortgage or you can only pay a portion contact your mortgage servicer immediately if you no get this ball rolling it may take a while to get a loan servicer on the phone loan servicers are experiencing a high call volume it may also be impacted by the pandemic they've got employees that can't make it or sick or whatever and so there's so many people that are out of work that just trying to get a hold of these businesses and lenders that's a it's a hard thing to do a new federal law the corona virus aid relief and economic Securities Act that's the cares Act put in place two options for homeowners with federally backed mortgages number one is a foreclosure moratorium not going to do foreclosures and I think that is through either I think it's through July something like that but I know a lot of states have also put in too not law but they've also put into regulation whatever it is their own dates of mortgage of foreclosure moratorium so check with your specific state as to what the foreclosure moratorium might be like that's the first thing that the coronavirus aid relief and Economic securities the cares Act put in place the second is a right to forbearance for homeowners who are experiencing a financial hardship due to the Cova 19 emergency if you don't have a federally backed mortgage you'll still have relief options through your mortgage servicer or from your straight from your state you have to figure that out so mortgage forbearance forbearance is when you when do your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time and it doesn't mean you don't have to pay that you do have to pay that and like I explained earlier a lot of the forbearance that we're seeing they're requiring you to pay with the lump sum not too many months down the road forbearance doesn't erase what you owe you have to repay any missed or reduced payments in the future if your income is restored reach out to your servicer and resume making those payments as soon as you can you want to get back on the horse of making your payment's depending on the kind of loan you have them may be different forbearance options the moratorium that what that does is that suspends or stops foreclosure foreclosures when the lender takes back to property after the homeowner fails to make required payments on a mortgage foreclosure processes differ by state and we're not even really going to get into that but what options do you qualify your mortgage relief options depend on who owns or backs your mortgage that's the first thing you need to figure out is who owns your mortgage how do you do that the first thing you do to figure out who owns your mortgage is call your servicer so look at your mortgage statement go online look at your mortgage statement online see who it is grab their 1-800 number or shoot them an email get that conversation going hey is my mortgage a federally backed mortgage and again it may take a while to get through loan servicers are experiencing a lot of volume so your mortgage servicer is a company that you send your mortgage payments to each month and second find out from your mortgage servicer if your mortgage is federally backed to be eligible for protections under the cares Act your mortgage must be federally owned otherwise back to one of the federal agencies and entities list below if you don't know who owns your backs your mortgage call your servicer pretty basic and this servicer has an obligation to provide you to you the best of its knowledge the name address and telephone number of who owns your loan so here's a list of federal agencies and entities that provide loans and most of these you'll be part of Housing and Urban Development that's HUD you've got US Department of Agricultural that's USDA you've got USDA Direct you've got USDA guaranteed two slightly different versions of USDA the Federal Housing Administration that's FHA and that also includes reverse mortgages US Department of Veterans Affairs that the VA loan it's basically for veterans Fannie Mae and Freddie Mac Fannie Mae and Freddie Mac are the two big ones that most people would have a loan from but those are all basically governmentally backed loans if you have a loan that's in that pool then yep nearly half in the nation's mortgages are owned or backed by Fannie Mae or Freddie Mac and then to look up online whether your mortgage is owned or backed by Fannie Mae or Freddie Mac click these links and I will put this article this is the guide to the coronis mortgage relief options from the Consumer Financial Protection Bureau I will try and remember to put a link to this in the description on our youtube channel so if you find this if you're listening to this on the podcast you can always go to some properties northwest or youtube channel and I'll have a link to this website into this article where you can look up is my loan backed by Fannie Mae or is my loan backed by Freddie Mac they've got some links there and you can take advantage of that so if your mortgage is a federally backed mortgage you have to mortgage relief options under the cares Act you won't be foreclosed on for 60 days after March 18th and specifically the cares Act prohibits lenders and servicers from beginning a fort judicial or non judicial foreclosure against you or from finalizing or foreclosure judgment or sale during this period of time I don't think any lender is going to jump into that that is a real hot spot and lenders they don't want to do that they want to work with you and figure out how you're gonna pay this mortgage once the coronavirus is basically over and we've kind of gone back to work and the economy's back up and running they want to work with you to get to that spot so call them up if you can't make your payment's get that conversation going do what you can so second the second thing is you have a right to request a forbearance for up to 180 days and that's if your loan is federally owned you also have the right to request one extension for another up to 180 days so six months on the first one six months on another one most of the forbearance options that I've heard have been three months this is saying you have the option for 180 days I'm not sure and I haven't heard of anybody getting one beyond three months so I'm not really sure there you must contact your loan servicer to request this forbearance it's not going to happen you got to do it go out there and get it there will be no additional fees penalties or additional interest beyond scheduled amounts added to your account you do not need to submit additional documentation to qualify other than to claim you have a pandemic related financial hardship so basically reach out to your lender find out who owns your loan if you qualify get a forbearance if you need it if you don't then you need to figure out with your lender what options they can provide to you and that and so we're still on if your mortgage is backed by Fannie Mae or Freddie Mac if your mortgage is backed by Fannie Mae or Freddie back in addition to the foreclosure moratorium and forbearance if you are granted forbearance to delay making your monthly payments during this temporary period you won't incur late fees all right that's good you won't have delinquencies reported to credit reporting companies all right that's good foreclosure and other legal proceedings will be suspended how about borrowers with a mortgage not backed by the federal government what can you do there if you have a mortgage loan that is not backed by one of the federal agencies or entities that I listed earlier contact your servicer the Consumer Financial Protection Bureau and other financial regulators have encouraged financial institutions to work with borrowers who may or may not be who know who are unable to meet their obligations because of the effects of code 19 your servicer should be able to help you identify alternatives that may be available due to you given your specific circumstances and your state may also offer additional mortgage relief options so don't don't leave it just with your lender reach out to your state wechat to your state's websites I know the dot-gov has been particularly helpful for me with a lot of the governmental information I need at least it might not have the information there directly but I can kind of figure out I can navigate to where I think that information might be and kind of get going I haven't really ever spent much time on any of these government websites beforehand but I've spent a lot of time on the Washington state governor Inslee governor dot wad of something like that and some great information there it's been super helpful and so how to request forbearance or mortgage relief call your servicer we got that one down you may need to explain why you're unable to make your payment all right lost my job that kind of thing you might need to explain whether the problem is temporary or permanent that'll give your loan servicer or your lender an idea of how long of a forbearance they need to give you or kind of what the terms are you might need to explain details about your income expenses and other assets like cash in the bank they want to see that you're really hurting alright so here are questions to ask when you are asking for a forbearance what options are available to help me temporarily reduce or suspend my payments what are my options asked that might seem like a super simple question but that's the point of your phone call to your servicer are their forbearance loan modification or other options tell me what tell me what you can do for me what can we work out here this is a it's a tough time this is brutal I don't want to call you I don't want to make this call I just want to be able to pay my payments want to get my mortgage going I know I'm not gonna be able to make it what do I do have them outlined what the options are and then can you waive late fees as part of your mortgage agreement there's always late fees involved if you haven't paid see if you can get those waived I think most lenders are gonna do that once you've been able to secure forbearance or another up mortgage relief option ask your servicer to provide written documentation that confirms the details of your agreement and so that once you're so that you're clear on what the terms are get it in writing that's a big thing because these servicers are super busy if you don't have it in writing you're not gonna be able to get back to that other person you talked to you know maybe yesterday or whatever get it in writing you've got it written that's your agreement you can provide that to others down the road which you will probably be asked for alright so what do you do once you've missed once you've received your mortgage relief option so the first thing to do is keep your written documentation on hand because like I said they're probably gonna ask you that for that down the road all right so keep your written documentation on hand pay attention to your monthly monthly mortgage statement look at that see if that changes at all that's not in accordance to the forbearance agreement or relief option that you signed up for some change there hit up your service agreement hey I'm seeing this number change here should that have changed so that balance have gone up during this time period the third thing is keep an eye on your credit so the credit agencies if you don't make your payment they have the ability to report this to a credit agency I think a lot of that is not going to happen in this one because if you do reach out you're kind of doing a good-faith and the lender on the other hand should do a good-faith to you I don't know exactly how that's gonna work so ask your lender ask your servicer okay is this gonna impact my credit at all it's a good idea to routinely check your credit reports in order to make sure there are no errors or inaccuracies if you stopped making mortgage payments without a forbearance agreement the servicer will report this information to the credit reporting companies and it can have a lasting negative impact on your credit history so figure out what you're gonna do get that game plan going make sure that you ask your lender hey this is not gonna impact my credit correct and go down that road you just want to cover yourself all the way around lastly once your income is restored contact your servicer and resume your payments get that going as soon as you can so you can get back on track you're gonna have a bunch of other payments that are probably gonna be late need to figure those out as well because this is a tough time and you just want to try and keep on top of it going back to work it's gonna be difficult so you've got all these bills you're going back to work kind of just this really tough mental space to be in but make sure that you contact your service and resume your your payment's and if you're continuing to receive some income that turns out to be more than you need for your bills and expenses don't blow it all consider putting it aside because at some point you may need that very soon so even if you're getting your cares act money through one for more than another whether it's a $1,200 payment or whatever and you've got more than enough don't blow it that's kind of the bottom line here and lastly be aware of scams every time there is an act that comes up from the government there's always a bunch of scam artists out there that take advantage of people who don't really understand what's going on or what they should be doing here are some signs to what you can watch for as scammers arise they charge a high upfront fee for their services they promise to get you a loan modification saw a lot of that no 708 all the way through man 2013 2014 they will ask you to sign over your property title don't do that brutal ask they will ask you to sign papers you don't understand put a bunch of legal jargon in front of you if you're not sure get somebody else who can take a look at it and go through it they will tell you to make payments to someone other than your servicer that's always a famous one we work on behalf of Bank of America will do you know you probably don't and that's a scam artist they will tell you to stop making payments altogether just you don't have to make them here's how we're going to work this out it's like I want to see that in writing from my actual under they will promise you payments in connection with providing credit card numbers and other personal information huge red flag don't let that happen to you so those are some of the major things to look at from scams and that is kind of a brief overview of the basics of getting relief for paying your mortgage I've got a number of friends who have just bought homes literally two of them closed on homes and their first payment was April 1 and they had to enter into forbearance just a difficult situation payment number one or know one of the two people they were able to make their payment the other one just flat didn't have the money I think they're on an FHA loan something like that it's just horrific circumstances you obtain the American Dream you buy your first home than the coronavirus it's so I think bottom line is is if you are needing a mortgage relief option know that you are not alone and that there are ways to work through it you might have to have some patience to get through the process because there's literally probably millions of other people doing the same thing right now so know you're not alone have some patience stick at it and if you're watching this video or this podcast on youtube feel free to reach out to me in the comme
ts give me a quick question I get that all the time I tried my best to answer all the questions to come through all the comments some of them are hey dude nice video probably not going to answer that but if you ask me something specific to real estate I'll probably answer so that is it for this podcast once again I'm Sean Reynolds from sumit properties Northwest Reynolds decline appraisal thank you so much for watching this episode of the Seattle real estate podcast I appreciate it and I will see you tomorrow all right thank you bye don't forget to subscribe to our channel and hit the notification valve so you'll know when our next video is out [Music]
