Here we are, just out of perhaps the oddest Memorial Day weekend in memory.
The summer is here! But it feels like much of our country is still mired in winter. And that feels like it is still the case, no matter the hints of progress against this virus, and no matter the steps taken towards reopening you might be experiencing in your locality.
All of it just feels … odd.
But Memorial Day was a good reminder.
Our current struggles can be overcome.
And I believe they will.
Even just one or two generations ago, our nation faced much worse — and prevailed. The sacrifices we have all been forced to make in the midst of this pandemic are nothing compared to the rationing and privation of the WWII generation, and the devastation of the generations during WWI and the Great Depression.
And the young men and women who have served overseas (especially in war-torn environments) could also paint a compelling picture of what REAL devastation looks like.
I don’t minimize the great battles that many of my clients and friends are facing in saying this — if anything, I offer it as a beacon of hope. Because these times are indeed extremely difficult for so many.
But we will rise above, I’m certain.
Starting this week, I’m returning to my previous “Real World Strategy Note” format, for the sake of offering you some digestible, actionable information about relevant topics.
And this week, let’s talk about mortgages…
The Important Details of Mortgage Forbearance For Taxpayers
“The only way around is through.” – Robert Frost
With unemployment numbers through the roof (officially at 14.7 %, though the real numbers are likely to be much scarier), millions of homeowners are seeking various forms of mortgage relief.
If you are currently struggling, and your June payment looks dicey, my advice to you: be very careful.
Recent numbers that I’ve seen from the real estate data firms indicate that as of last week, 4.6 MILLION mortgage holders were in some sort of mortgage forbearance — which is up from 150,000 or so in early March.
And that number is likely to already be significantly higher.
Now it’s true — the federal government has made it possible for borrowers with government-backed mortgages to suspend their payments for up to a year without immediately paying it back.
But there’s a key phrase in there: “government-backed”.
That’s because about 30 percent of homeowners have mortgages that are owned by banks or private investors, which are not governed by the same rules.
If this is the case for your mortgage, you might be on the hook for the FULL amount of what you have deferred at the end of your mortgage forbearance period (which is often three months).
The mortgage companies are all offering these options right on their home pages, and some do a better job than others of spelling out the terms.
But I urge you: make sure you understand the terms of repayment before you enter into this agreement.
The good news is that there will be ways through these problems (extending terms, renegotiation, etc.), but they can be cumbersome and paperwork-heavy.
And we’d be happy to help you figure out any tax and financial implications of these decisions as well.
In the meantime, I’ll leave you with some resources:
- Here is a guide to mortgage relief options from the Consumer Financial Protection Bureau — and they are offering a tool to find out who owns your mortgage.
- HUD offers a list of housing counselors on its website (or you can call 800-569-4287 if you like really long hold times), and so does the Consumer Financial Protection Bureau. HUD-certified counselors often (but not always!) offer their services free of charge because they receive funding from the government.
- Here is a directory of mortgage servicers. These companies are generally required to contact you 30 days before your forbearance period ends to work out the terms with you. If you don’t get that call, or you want to get ahead of the game, you can contact them yourself.
- Here is a good resource of potential additional protections you might find useful.
- If all else fails, and you aren’t making progress with your servicer, you can file a complaint with the Consumer Financial Protection Bureau. Your complaint will get forwarded directly to the company and they will work on your behalf to at least get a response, generally within 15 days.
I hope this helps!
Don’t forget … we’re in your corner.
And, of course, feel free to send this along to your friends who might need help, especially when it comes to dealing with the tax-related issues all of this might bring up.
That’s what we do!
Emelia Mensa EA, CPA
Emelia Mensa CPA
“CRISIS Action Plan” for my clients and friends:
1) Don’t marinate in other people’s panic. Be mindful of your social media consumption.
2) Continue to stay financially and logistically prepared for worsening situations.
3) Make sure you have some ready, liquid assets, if you are able. (I.e., cash in the bank, and in hand.)
4) Set aside plans for any big spending until the dust settles — but especially look out for your small business owner friends and vendors.