Mortgage and rent payments are coming up and many of my Friends need a Game Plan. If you were one of those burned in last Recession, please take comfort that the banks have more experience with this now and manage it better. They want you to stay in your home. Further, our Federal government has taken important, proactive steps to protect you. Your best defense is a good offense--early and regular communication is your shield! Please keep in touch with me as well. My skill set includes resourcefulness, and I might be able to open some doors for you.
About half of my Friends have mortgage loans guaranteed by Fannie Mae and Freddie Mac. The first bit of good news for us is that they are healthier than they were in 2007, when much of their portfolios were in subprime loans. (watch or read The Big Short while riding this out at home--not suitable for kids--and know this is not happening again). The other lenders are likely to follow this government mandate to provide "forbearance." What this means is that the banks have been ordered to give you flexibility in paying your mortgage based on certain qualifications. Depending on your situation, you can pay reduced or no mortgage for up to 12 months.
**You can't just stop paying your mortgage payments**. Contact the lender who services your loan. Its easier before you miss/short any payments. Tell them you have suffered a loss of income due to the Coronavirus Pandemic and you need to work out a payment plan. Some will allow you to pay interest only at this time. Please take good notes of who you spoke to and when!! There is a repayment component to this, so it's important to note that this is not a forgiveness of debt. This is an important tool to keep you in your home while we ride out this storm together.
If you are already in default, Fannie & Freddie have already directed lenders to not foreclose out of the interest of public health. But that doesn't mean that you have a pass to do nothing! Contact the lender and let them know you have missed a payment due to loss of income. Ask them to help develop a payment plan and waive any late fee. I was told by a banker that If they decline, ask for a Supervisor and push for it. She also advised that it is important to ask "What is the total to bring me fully current, including late fees?" Again, take good notes. File them and tell your family where this file is. Communicating your plan and actions to your family is very important as well!
On another positive move, Fannie and Freddie have been directed by the government not to report anyone in the Forbearance Program to the credit bureaus. Next week, I'm going to ask everyone to do a credit check, so stay tuned.
We do need our cities to step up to protect renters from evictions at this time. If you are renting, treat your landlord like you would your lender--talk to them and document. Realize that many of them have the mortgage to pay with your rent payment. So if you don't communicate, they can't reach out to their lender to develop a repayment plan in a timely manner. If you are the landlord, reach out to your tenant, who might be too afraid to let you know their financial hardship. We are truly in this together and good communication and honesty are necessary to get us through with less bruises!
If you have a Short Term Rental business suffering from cancellations, offer it to traveling nurses, police officers, or others trying to isolate those at high-risk. I'm hoping the government will offer some tax deduction for this down the road, if that isn't already in the works.
Please apply the same above recommendations for any bill you have to pay. We expect the utility companies are not going to cut anyone off from electricity, gas, and water at this time, but the state and local government might need to be involved. Contact the providers, explain your lack of income, see if you can defer or reduce payments without a fee.
By all means, be pleasant with these companies fielding calls. Stress levels are high with many of these workers too and some are better at customer service than others. If you need to speak to another representative, ask for one respectfully and apologize for your behavior if you do happen to get short. I read yesterday that people are being rude to staff at the grocery store. They have the same worries as the rest of us and we will get through this together, so buckle up with an extra pack of patience and practice your best communication skills. If you have children in your home, remind yourself that they are learning by your example. And please check in with your neighbors by phone or by Facebook and ask how they are doing. You are welcome to Share the advice that I have compiled and let me know if any questions pop up. I will have some suggestions over the next few weeks, many obtained from the various home service providers that I work with. We will ride this out together! Stay Well at Home!