Your home mortgage or rent payment during the COVID-19 pandemic
D’Lux Real Estate Services has decided to explain some important information to avoid “victims” in today’s turmoil (this is in the United States of America only).
Read your mortgage documents, focus on the interest payments, foreclosure moratorium and right to forbearance. Then read the CARES Act for its “aid relief” and “economic security.” This reduces the chance for a mistake or an error.
Anything below will refer to FEDERALLY BACKED MORTGAGES. Do not believe that you will receive any advantages by not paying your obligations. You must continue to pay your contractual obligations until you have reached a new, executed agreement.
This is when your lender allows you to “pause” or “reduce” your mortgage payments for a period. IT DOES NOT ERASE YOUR DEBT, meaning you still must PAY the “missed” or “reduced” payments after the “grace period.”
- VERY IMPORTANT: Most of the time it refers to principal; not interest, taxes, or insurance (PITI).
- NOTE: This is a very complicated and detail-oriented step, so you need to be extremely educated and get best advice. I suggest always revised what has been approved by the government, not private sites. Example: https://www.consumerfinance.gov/ask-cfpb/what-is-forbearance-en-289/
Read your mortgage contract, all details on how your lender will take your property are written in detail!
- The CARES Act prohibits lenders and servicers to start any kind of foreclosure or finalized a judgement against you for 60 days after March 18th, 2020.
- IF you experience FINANCIAL HARDSHIP due to coronavirus pandemic, you have the right to request a FOREBEARANCE up to 180 days (plus an extension). This is your time to “flip” the situation to your benefit when about to lose your property, BUT only if you claim to have a pandemic-related financial hardship. If you do not know whether your situation is defined as “hardship” talk to your lender and try to negotiate out your foreclosure procedure. Lenders are in the business of borrowing money, not to own properties.
- Late Fees: The lender/servicer can and will charge late fees, accrued fees to unpaid interests, and many other charges that are written in the very fine lines of your particular unilateral contract (mortgage). Any negotiations you agree with them, GET IT IN WRITING!
After you read your mortgage documents and the CARES Act, you will be able to answer the following questions:
- Why are you unable to make your payments?
- Is your problem temporary? Or permanent?
- Do you have all details about your INCOME and EXPENSES, as well as assets, properties and interest in value?
- Are you in the military, retired, elderly, or have any other particular condition?
Talk, listen, take your time to analyze what you just heard. If you do not understand, call back and ask the questions you did not get answered or did not get a clear response to. COMMUNICATE: Three important questions to keep in mind during your “interview” with your lender:
- What are the options available to “reduce” or “suspend” your payments (obviously, temporarily).
- Do you do forbearance? Loan Modification? Other options? How? What is required? How will it affect you?
- Can you waive late fees? This is the main question once you feel you are talking to the “right person” (good chemistry), because this is exactly what will affect your credit score, your future and many other matters on your life.
Rents (USA only)
Tenants, for residential only, place yourself in the shoes of your landlord!
If you cannot pay your rent as a result of your coronavirus pandemic, you have 120 days “grace period” since March 27 2020 to stay at your place. It does not include utilities, unless they are stated in the lease agreement.
The Federal Law provides, under the CARES Act, suspension or moratorium on evictions to properties whose landlords have a federal backed mortgage, but after that period, they can give you a 30-day NOTICE to empty the premise. The landlord that is not affected by Federal loan has to follow State and Local laws. In any case, eviction is different than a civil case for unpaid debt that will eventually affect your credit. It is better to work it out to keep your good record if you are planning to rent or buy another place.
TENANT RELIEF DURING THE PANDEMIC VARIES BY STATE. SEE WHAT HAS BEEN SET IN PLACE WHERE YOU LIVE.
**Consult with your lender(s), CPAs, financial advisors, legal advisors. D’Lux intention is to induce you to READ and get EDUCATED to relax your STRESS during pandemic times, NOT to give legal or financial advise. Refer to your professional advisors.
NOTE: You can contact us if you are ready to sell your property, or if you are in position to buy.