Some US homeowners they get mortgage relief they don't want

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Tenants will receive assistance if they cannot pay the rent for the covid-19 2:37

(CNN) - As part of its $ 2 trillion coronavirus aid package, the federal government has cleared the way for struggling homeowners to get mortgage relief from lenders. But for some owners, help may have come too easy.

In the past two months, homeowners have been crowding administrators' websites and phone lines looking for information on mortgage tolerances, allowing them to suspend mortgage payments for up to a year. And now there are more than 4 million homeowners on leniency plans, according to the Mortgage Bankers Association.

But some homeowners were put on forbearance programs they didn't want, and that has caused problems for them. Having that benefit, even if the owner makes regular payments, has prevented some from applying for new mortgage loans or refinancing their existing mortgages.

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"I never asked to be on the show," said DJ Stavropoulos, an Atlanta real estate agent who says he called his mortgage manager, Wells Fargo, in March, just to get information on how a payment license would work.

However, in early May, he received a letter from Wells Fargo confirming that his loan payments were deferred.

"I was alarmed that they were doing this behind my back," Stavropoulos said. "I think the average person is as confused as I am and would be surprised to find that they are under financial relief and don't know it."

But Tom Goyda, a spokesperson for Wells Fargo consumer loans, said that is not Wells Fargo's intention.

"Just asking about financial relief shouldn't result in applied relief," Goyda said.

"We want customers who need assistance due to the covid-19 to be able to request and receive a stop payment quickly and easily," he said. "If a customer no longer needs that assistance, we will be happy to remove them from the suspension of payments."

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The Accelerated Relief Process

The Coronavirus Economic Aid, Relief and Security Act, or the CARES Act, sought to accelerate relief for homeowners with federally-backed loans by allowing administrators to license their loans without documentation. Conventional loan servicers also offered a similar tolerance.

But the relief bill came so fast, and administrators moved so fast trying to handle millions of calls, that there was a lot of confusion, according to Mark Moore, branch manager for the Fairway Independent Mortgage Corporation in Atlanta.

"In the rush to push the CARES Act, they included leniency, which is great for people who need it," said Moore. "But they didn't test it. You don't have to demonstrate the need. Anyone who wants deferment can get deferrals. ”

Moore believes there should have been more restrictions on who could qualify and what the terms of the plans meant.

"I would have liked to see more clarity that this is for people who have lost their jobs due to covid, not for people who want not to make payments," he said. "And more clarity on what will appear on your credit report and how you can refinance or obtain a new loan once you are in default."

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That lack of clarity has led to a wave of confusion and consumer complaints.

Complaints filed with the Office of Consumer Financial Protection have increased dramatically since the outbreak began, and include several from homeowners who said they received indulgences without requesting it, according to the nonprofit research group US Public Interest Research Group.

"Oversight of the default process is woefully inadequate, so it is not surprising that the biggest coronavirus problems are related to mortgages," said Mike Litt, director of consumer campaign for US PIRG.

One person who filed a complaint with the CFPB said: “I contacted my mortgage servicer… for informational purposes only, to see what programs they were offering during the covid 19 pandemic… I said I did NOT want to be on a tolerance plan for Payments".

The homeowner claims they were put on leniency anyway, and when they contacted the administrator to remove him from the program, they were told it would be canceled. But it was not like that.

“The stress of this situation has affected my physical and mental well-being, it has affected my personal relationships, as well as the ability to do my job. I have spent hours on the phone and writing letters… I wonder how many others is this happening to? ”Wrote the owner.

The impact of leniency plans on refinancing or obtaining a new loan

Loan managers, like Wells Fargo, say they make it clear to homeowners that they are not entitled to a new mortgage or to refinance an existing mortgage loan until their suspension of payments plan ends.

On Tuesday, Freddie Mac and Fannie Mae provided guidance on this. The mortgage giants have issued a clarification of the requirements for coronavirus-affected homeowners who are lenient or recently walked out of the payment exception, allowing some to still get new mortgages or refinancing, according to the Federal Financing Agency. Living place.

Borrowers who are technically under payment deferrals but continue to make payments are eligible to refinance or buy a new home if they are up to date on their mortgage, said director of the Federal Housing Finance Agency, Mark Calabria. Borrowers who have defaulted will be eligible to refinance or buy a new home three months after their leniency ends. They must have made three consecutive payments under their payment plan, deferred payment option, or loan modification in order to obtain a new loan.

The action allows homeowners to access record low mortgage rates and reduce their monthly payments, Calabria explained. This will keep the mortgage market moving in the most efficient way possible, he said.

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The Impact of an Unwanted Tolerance on Your Credit Score

Deferring payments should not adversely affect your credit score. According to the CARES Law, if you are in a leniency plan due to the pandemic, you must be reported as current in your payments.

But lenders can add a special comment code that indicates your account is under leniency with reports they send to credit reporting agencies, said Francis Creighton, manager and CEO of the Consumer Data Industry Association.

Can a borrower see these codes?

"It depends on how a lender reports the deferment of payments," Creighton said. "Consumers should ask their lender how they plan to report any deferred accounts to credit reporting agencies."

Consumers can get their credit report weekly through April 2021 at AnnualCreditReport.com for free and check their credit.

"Credit scores are dynamic and weigh many different factors," says Creighton. "While you may be reported as current, other factors could lead to changes in your score, including the amount of credit you are using or you may have opened other accounts that could affect your score, in some cases positively and in others in a negative way ”.

If you've been incorrectly included in the deferment of payments, Creighton concludes, you should dispute that directly with the lender or by contacting the credit bureau that displays the incorrect information.

Mortgages