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Skipping mortgage payments? Here's what you need to know when it's time to resume

Ron Hurtibise, South Florida Sun Sentinel on

Published in Home and Consumer News

Mortgage servicers took their sweet time last spring advising customers affected by the pandemic about their right to hit the pause button on making payments with no documentation required, and no penalty charged to get back on track.

Now that most of those borrowers are preparing to resume making payments, mortgage servicers are again facing criticism for not being straight with their customers about their options.

Because those borrowers typically have less equity to work with, consumer advocates say they will need to take the initiative to work out a payment resumption plan with their mortgage servicers — which include traditional banks and payment processors that aren’t banks. If they’re not satisfied with the answers they get, help is available from volunteer legal aid organizations and federally funded housing counselors.

“This is often very complicated stuff,” said Mike McArdle, assistant director of mortgage markets for the Consumer Financial Protection Bureau. “What is a deferral? What is a modification? What are term extensions? It’s important for borrowers to understand what is going on with their loans.”

Kim Henderson, president and CEO of Neighborhood Housing Services of South Florida, one of the area’s federally certified housing counseling providers with offices in Miami and Fort Lauderdale, said her organization hasn’t see an uptick in requests for help yet — probably because the Biden administration extended the forbearance period through Sept. 30 and the foreclosure moratorium through June 30.

“It’s coming, but not yet,” Henderson said. “We’re preparing. It’s one of those things that people won’t worry about until it hits them in the face that the party’s over.” When that happens, she says, her organization and numerous others will be ready to help, she said.


Complaints about mortgage servicers increasing

In a report released last week, the Consumer Financial Protection Bureau said in March it received the largest number of consumer complaints about mortgages since April 2018. Complaints mentioning forbearance or related terms reached their highest monthly average since March and April of 2020, when consumers seeking forbearance protection made available for borrowers of federally backed loans first began complaining about getting inaccurate information from their mortgage servicers. The report did not identify subjects of the most recent complaints.

Andrea Bopp Stark, an attorney at the nonprofit National Consumer Law Center, says some mortgage servicers are again providing confusing and contradictory information about borrowers’ options for resuming payments on federally backed loans. Some servicers of private market loans not subject to federal requirements are requiring borrowers to pay back missed payments in a lump sum or make monthly payments over a couple of years, she said.

While bound by the foreclosure moratorium, private-market lenders are not required to provide any affordable post-forbearance options, Stark said. She’s aware of one consumer who had to borrow $30,000 to get current and another who had to dip into his retirement account.


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