Question: Libby, should I make my mortgage payment during the COVID-19 pandemic? Answered by Libby Guthrie
Hi, I’m Libby Guthrie with Keller Williams in Northern California, and I’ve had a lot of clients ask me recently whether or not they should make their mortgage payment in light of the COVID-19 situation. So I’m going to give you a few tips on what to do if you are in some kind of hardship or you’re thinking about not making your payments.
At the end of this video, you can request our free report, which is an emergency preparation checklist for your home.
Currently, there are probably about 3 million homeowners that have requested some kind of forbearance plan from their mortgage company.
If you are experiencing some kind of hardships, such as a job loss. Loss of hours working or some kind of illness, you would want to reach out to your mortgage company and talk to them about your options.
Don’t assume if you just stop making your mortgage payments that they’re going to automatically put you on some kind of forbearance program.
The very first thing you want to do is reach out directly to your loan servicing department. That is the department that collects your payment each month.
If you get your statements by mail, there would be a customer service phone number and an account number or loan number on that statement. Make sure you have those numbers handy.
If you pay your mortgage payment online, you can go online and get those numbers too.
Call and talk to them directly about your situation. Make sure you document each time you speak to someone and who you talk to. They’re there to help you, remember that, and they have beefed up their call centers to accommodate all the calls they’re getting right now.
Explain to them your current situation and ask them about the options that you may have. Most of the loan servicers are servicing your loan for an investor that actually owns the loan. They will need to follow the options and solutions that the investors have guided them to do.
The big investors obviously are Fannie Mae, Freddie Mac, if you have conventional type financing, there’s also FHA, which is government type financing or HUD, and then there’s also the veterans’ administration, VA type loans.
The loan servicing department will guide you through what type of forbearance program that you may qualify for.
Usually, the forbearance plan includes suspending all or part of your mortgage payment. Please remember that a forbearance plan is not a forgiveness plan. You will need to make up those payments that you’ve missed.
Most servicers will give you approximately two months to six months reprieve in your monthly payment.
Most of them are not charging late charges and will not report your delinquent payments to the credit bureaus during that timeframe.
Towards the end of that forbearance timeframe, you will need to contact your mortgage servicing department or they will probably reach out to you so that they can re reevaluate your situation at that time.
Some of the things that they may do at the end of that timeframe is extended the forbearance timeframe. They may tack it on to the end of your mortgage.
For example, if your mortgage is 360 payments or a 30-year mortgage, they would tack it on to the end of that. Extending the timeframe for your mortgage. They may ask you to make partial payments and or put you on a payment plan that would raise your monthly payment so that you could make up the difference over a period of time and then you would catch up that way.
The other alternative is that they may ask for a full payment at the end of that timeframe. Another alternative is they may ask that you make up in full all the delinquent payments.
Again, communicate with them and let them know what your situation is and if it changes.
During that forbearance timeframe, one thing to remember, if you do make your payments to for your taxes and insurance separately, and it’s not an impounded account, you will still need to make those payments during the forbearance period.
Also, consider if you do have an impound account or what they call an escrow account, and the mortgage company is paying your taxes and insurance directly to the County for the property taxes and directly to your hazard insurance company, and they don’t have enough money to pay those.
You would want to keep an eye on that escrow impound account balance to make sure that there’s going to be enough money in there to make those payments.
You would need to communicate with them and say, what happens if I cannot make up these payments and you don’t have enough money to make my hazard insurance payment and or my property tax payment?
Don’t just assume that they’re going to go ahead and front that money because they may “forced place“, for example, on your insurance, and that would be very, very expensive insurance coverage.
And when they “forced place” an insurance policy, that immediately raises your payment. You may want to look into refinancing your mortgage for a lower rate, if you are current on your mortgage and you do have income coming in so that you can qualify for a refinance.
That will give you a little bit of a reprieve on making payments for about a month and a half because for example, if you close escrow on a refinance on May 15th your very first payment would not be due until July 1st.
If you do have a forbearance program and you can make partial payments, please try to consider doing that or try to make the full payment, even if it’s a month behind.
Any payment that you make will go against the outstanding balance that’s delinquent.
Please remember that we will get through this, and if you have any questions whatsoever regarding whether or not to make your monthly payment, reach out to your loan servicer. Feel free to call me if you have any questions.
If you see that you cannot make your payments and you’re going to be forced to sell your home, please reach out to me. I’d be happy to talk to you about that and what your options are.
My phone number is (925) 628-2436 and you can request the free emergency preparation checklist at the end of this video.
Thanks a lot.