Homeowners who had endured loans during the pandemic are now finding themselves in over their heads as repayment looms large.
Since March 2020, millions of homeowners have received forbearance under Cares ActAllows them to temporarily stop or reduce their mortgage payments.
to be eligible for mortgage Concessions were to be made to homeowners:
- have experienced financial hardship directly or indirectly due to covid pandemic, and
- There is a federally backed mortgage, which includes HUD/FHA, VA, USDA, Fannie Mae, and Freddie Mac loans.
Stop On payments that expired in July last year, an extension was provided for those with federally protected mortgages until September 2021.
Now some homeowners are finding it impossible to pay past payments on their home by taking into account the current payments.
Jimmy Stokes is one such person.
The 70-year-old said he was told that his regular payments would be added to the end of the loan.
However, in January, per WPMI, he said the bank sent a letter claiming he owed more than $26,000 – the total amount of payments missed.
“If I had known, I would never have done this,” Jimmy told the station.
He said that the bank initially asked him to apply for a loan modification to catch.
“And that will be it. Be simple,” said Jimmy.
Then, according to WPMI, he received a foreclosure notice.
The due date for his loan modification application was 16 days after the date his house was to be sold to the highest bidder on Courthouse Stairs, per WPMI.
“It’s been tough because I can lose everything I’ve done, you know, everything I’ve worked on,” Jimmy lamented.
“It’s a big mess for homeowners right now,” consumer protection and bankruptcy attorney James Patterson told WPMI.
Patterson said he’s received 20 calls in the past two months from people with stories like Jimmy.
He warned companies that customers had what they thought was a forbearance, but they were then forced into subsequent loan modifications to the detriment of consumers.
“The borrowers have $10,000, not $20,000,” he said, adding that it is prompting people to file for bankruptcy to prevent the foreclosure from proceeding.
Bruce Weiner agrees.
New York based partner Rosenberg Musso Weiner LLP told The Sun that it’s seeing a roughly 5-10% increase in bankruptcy filings so far this year, some of which are tied to issues surrounding home foreclosures.
He said some customers went into forbearance and didn’t make any payments during the moratorium (those costs were not realized, but kept accruing) and suddenly found themselves facing a mountain. loan of,
Mr Weiner said banks are reluctant to cut a deal with owners, but bankruptcy courts are mandating that they sit down with homeowners to try to enter into amended loan agreements.
This may include reducing the interest on the mortgage, for example, or in some cases extending the mortgage from 30 years to 40 years.
According to the legal research firm EpiQBankruptcy filings have begun to rise this year, and the number of new cases reported in March has increased significantly since February, but is lower than last year’s.
The total number of filings is still lower than last year, with new filings down 17% in the first quarter of 2022 compared to the same period in 2021.
However, Mr Weiner said he expects the number of bankruptcy filings to increase during the year, especially during the massive cost of living crisis. inflation,
Amy Kwakenboss, Executive Director American Bankruptcy Institute Agreed.
She told The Sun: “Amid rising interest rates, rising inflation concerns, labor shortages and supply chain challenges, access to bankruptcy is inevitable for struggling consumers and businesses.”
Individual filing may also increase if Congress passes Legislation This would increase the debt limit under Chapter 13 of the Insolvency Code to $2.75 million from the current $1.2 million.
The bill, which was introduced in the Senate last month and has bipartisan support, aims to simplify eligibility for Chapter 13 protection and make it easier for self-employed people to qualify for bankruptcy relief.
meanwhile, consumer protection financial bureau (CPFB) says it is important to know your options before the forbearance expires and reach out to your servicer for the plan ahead.
It says that there are different forms of repayment plans available.
- Repayment plan – This option can work if you can afford to pay more than your regular payment for a few months.
- Deferred or Partial Claim – If you can resume your regular payments but cannot afford to increase your payments.
- Modifications – If you can no longer afford to make your regular mortgage payments.
- Reinstatement – If you want to refund all your missed payments in one go.
If you’re concerned about losing your home, the CFPB says to contact a HUD-approved housing counseling agency.
They can help you explore your options and guide you through the paperwork and process of working with your valet.
Here’s How to Find housing counselor near you.
here’s more housing assistance For Americans to buy their first home.
Other than this, cities Where sellers are dropping home prices.
We pay for your stories!
Do you have a story for the US Sun team?