Mortgage Relief – Is it really relief or is it simply a band-aid?

The Coronavirus epidemic has upended almost every aspect of our lives. The financial impact of this virus has hit many homeowners in the gut, leaving them gasping for air. Many Long Islanders are in a panic over missed mortgage payments or they are fretting over how they are going to make the next upcoming payment. Even in thriving economic times, meeting your mortgage payment is not easy for Long Islanders. Because homes are expensive on Long Island and real estate taxes are high, forty to fifty percent of a family’s monthly income can be devoted to paying the mortgage payment. The federal government has offered some relief to homeowners who are financially struggling through protections provided in the CARES (Coronavirus Aid Relief and Economic Security) Act. The CARES Act offers forbearance relief to those homeowners who have federally back mortgages. If your loan is not federally back, you will need to consult with the mortgage servicer or lender about forbearance options. First, the CARES Act places a moratorium on foreclosure proceedings for sixty days from March 18, 2020. So, the lender or mortgage servicer cannot commence a foreclosure action, obtain a foreclosure judgment or hold a foreclosure sale during this time. Next, the CARES Act allows those that are experiencing financial difficulties to request forbearance for up to 180 days and after that, an extension may be requested for up to another 180 days. A forbearance is an agreement you enter into with the mortgage servicer or lender that allows you to suspend making your regular monthly mortgage payment or reduces your payment for a short period of time. The purpose behind this is to accommodate a homeowner that has a temporary lapse in income. During this time, the mortgage lender/servicer agrees to forbear its right to foreclose on your home. It DOES NOT forgive the payments you missed. You will be required to make those up in the future. While many homeowners are suffering financial difficulties right now, it is uncertain how long it will last. Homeowners have indicated that they contacted their mortgage lenders and were provided with a three to six months suspension in which they did not have to make their mortgage payments. However, they were surprised to learn that after that time expired, they had to become fully current with all the payments that were due. Even if they were employed by that time, how would they be able to save enough funds to cover three, four, five months of mortgage payments. That daunting task is not practical and seems insurmountable. Apparently, they been advised by the mortgage lender to not worry about it right now. Really? The forbearance terms are simply a band aid, offering the homeowner temporary relief and probably creating a bigger problem in the upcoming future. Therefore, if possible, before entering into a forbearance agreement, contact an attorney who is knowledgeable in this area and discuss the options. If you have entered into a forbearance agreement and you can not make the lump sum payment that is due, I urge you to seek the advice of an attorney with experience in this area to plan your next steps. Forbearance may only serve as a band aid that exacerbates the underlying problem. You may left with a worse situation down the line.

Kimberly Berson is an attorney with over 25 years of experience in bankruptcy law and debt relief. She is also an assistant adjunct professor of legal studies and an instructor of paralegal courses including bankruptcy law and legal research and writing. You may contact her at kbersonlaw@gmail.com or 516-847-5122.

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