Americans struggling to pay their mortgages because they've lost a job or income during the coronavirus pandemic can put off that bill for up to a year due to the CARES Act. But while the measures should be creating a feeling of relief, many borrowers have been left anxious because of confusing messages from the government and banks.
Some homeowners say Wells Fargo, Bank of America and Chase have told them they have to repay those postponed payments – known as forbearance – in a lump sum once three months are up. It's an unexpected demand they fear could put them deeper in debt as millions are laid off and watching their retirement savings plunge with the stock market.
Anthony Adams is one of the uneasy Americans who is confused and worried about the rules. He is late on his mortgage payment to Wells Fargo after the coronavirus pandemic crimped sales at his family’s bakery in Orlando, Florida, forcing him out of a job.
Wells Fargo offered Adams a 90-day deferment on his mortgage, which is backed by the U.S. Department of Veterans Affairs, but the 49-year-old was surprised when Wells Fargo told him he’d still owe three months' worth of payments – plus the current month – once that forbearance period was up. Adams declines to say what his payments are.
“I feel like I’m in this odd Catch-22," Adams says. "I can get some immediate relief from postponing a mortgage payment, but the cost of that relief will put me further into debt.”
Why the surprise? It's a combination of evolving, sometimes conflicting rules depending on who owns the mortgage and many borrowers not understanding those rules.
Experts are concerned about how this will play out for borrowers over the coming months, even after the recently enacted relief package from Congress, called the CARES Act, which allows many people to delay their mortgage payments for up to a year.
“The problem with the CARES Act is that it doesn’t make clear how borrowers pay back the money during a forbearance period,” says Shamus Roller, executive director at National Housing Law Project, a nonprofit legal advocacy center.
"There’s a chance that something could go wrong in that process," he says, "and it requires a lot of interacting with servicers that are overburdened with calls.”
Some homeowners say Wells Fargo, Bank of America and Chase have told them they have to repay those postponed payments – known as forbearance – in a lump sum once three months are up. It's an unexpected demand they fear could put them deeper in debt as millions are laid off and watching their retirement savings plunge with the stock market.
Anthony Adams is one of the uneasy Americans who is confused and worried about the rules. He is late on his mortgage payment to Wells Fargo after the coronavirus pandemic crimped sales at his family’s bakery in Orlando, Florida, forcing him out of a job.
Wells Fargo offered Adams a 90-day deferment on his mortgage, which is backed by the U.S. Department of Veterans Affairs, but the 49-year-old was surprised when Wells Fargo told him he’d still owe three months' worth of payments – plus the current month – once that forbearance period was up. Adams declines to say what his payments are.
“I feel like I’m in this odd Catch-22," Adams says. "I can get some immediate relief from postponing a mortgage payment, but the cost of that relief will put me further into debt.”
Why the surprise? It's a combination of evolving, sometimes conflicting rules depending on who owns the mortgage and many borrowers not understanding those rules.
Experts are concerned about how this will play out for borrowers over the coming months, even after the recently enacted relief package from Congress, called the CARES Act, which allows many people to delay their mortgage payments for up to a year.
“The problem with the CARES Act is that it doesn’t make clear how borrowers pay back the money during a forbearance period,” says Shamus Roller, executive director at National Housing Law Project, a nonprofit legal advocacy center.
"There’s a chance that something could go wrong in that process," he says, "and it requires a lot of interacting with servicers that are overburdened with calls.”
