A Million Mortgage Borrowers Fall Through Safety Net

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Early on in the pandemic Congress set up a program to protect homeowners with mortgages from losing their homes. But about a million borrowers have fallen through the safety net missed payments and late fees or putting them at greater risk, and that's further heightening fears of an eviction and foreclosure crisis with more on why so many borrowers have fallen behind on their mortgages despite this relief program, we're joined by our reporter Andrew Ackerman Andrew. Thanks for joining us. Hi, Charlie. Thanks for having me Andrew. I, tell us how this program known as forbearance works. It's unique to this crisis forbearance in the past has been used very narrowly for hurricanes or very regional Zaslov this time it's being used to keep as many people nationally in their homes as possible who are harmed rather virus and it just means you can skip up to a year of payments on your mortgage. And then make them up later. Somehow there's a little bit of a complication because it it applies to all federally guaranteed loans which are most of the market Fannie Freddie or fha backed loans. There is a market for private loans or loans aren't backed by the federal government, and some of those lenders are offering forbearance and others aren't, but for most of the market people can get this. Okay. So when we talk about one million homeowners falling through the cracks, what exactly does that mean that means is that there are a million people who have for whatever reason stopped paying their mortgage their at least thirty days behind or delinquent, and they are not in a forbearance plan. This includes both borrowers with Fannie and Freddie loan as well as people who have a private loan alone from a portfolio loan with a bank or something you know securitise in the private markets will don't. They know about the forbearance program are they scared to participate what exactly is going on here? That's a good question and I think the data's kind of murky but the from talking to lenders, some consumers, some counselors, the picture that we have is that a lot of people don't understand what forbearance means so they don't. Really know what their options are. The other thing is that early on especially early on and still somewhat today the messaging from the lenders was you can take a forbearance, but you're GONNA have to pay all of your mis- payments in one lump sum at the end of the forbearance, and that's really scared people that the scripts that the mortgage companies go through with people on the phone have changed significantly and there's a lot more outreach and education efforts that some of the lenders are trying the consumer groups in some lenders. Say It doesn't go far enough. They'd like better marketing but those are the two factors. There's uncertainty or it's an unknown thing and there's this fear that people have to pay everything back at once and that's just not feasible for most people. Why don't you describe for us the process of trying to obtain forbearance how hard is it? It shouldn't be that hard. There's no documentation requirements. You Literally Call Your Service and you say you can't pay and you WANNA forbearance and they're supposed to the the law, the a rescue bill from March called Cares Act. It says that people are entitled to up to a year. It's says six months that can be renewed for another six months. You have to ask for it. A lot of the lenders have been offering customers short of six months at a time they've been doing three-month for. That can be extended another three months and then twice more beyond the initial six months. Just kind of depends on the lenders it's supposed to be really easy to get. It's still confusing even the we've talked to people who got the forbearance and they were also getting letters from their lender saying that they were at risk of foreclosure because they've missed all these payments and so you get these contradictory messages from your from your lender those lenders are saying hey. Just ignore these letters these contradictory letters we were required, send them by state or federal law, and just know that you've got a forbearance but we still talk to people who said that kept them up at night. Well, I was wondering, for instance, people were jumping through hoops trying to find information about forbearance on the telephone well that he has also been a significant issue if. You talk to counselors and some of the consumers we talked to they would say that I mean they describe this kind of bureaucratic nightmare to be honest everything has happened kind of quickly if you talk to the lenders, they say they're moving to kind of implement this forbearance plan on a scale that's never been envisioned for forbearance before. So they're hiring people to take calls their. End Result is at least initially, the times were significant. People were waiting a long time to get someone on the phone when they did get people on the phone calls might be dropped or they'd be sent to voicemail at the servicer and then they wouldn't hear back. So you have to kind of call the main number again, unfortunately, a lot of the servicers that the way. They're set up you can't just call one representative at the servicer. So you just of are dealing with somebody different every time they're following a script. So what they can say can be kind of very tightly controlled, and if it's with jargon people who aren't very skater even people who are sophisticated and don't know a lot about the mortgage market, you know it can be. It can be very confusing. These terms are not it's not intuitive. Are there a significant number of borrowers who've been in forbearance but of defaulted? Anyway that's the peculiar thing. There are significant numbers are what I would I think it's fair characterizes significant. There's about two hundred, fifty thousand people who were in forbearance at one point since the pandemic there now, no longer in forbearance and. They. are still past due on their loan and it begs the question. We don't know why that's the case. I haven't been able to find someone situated like that. But that's what the data shows and we we talked to people who had experience during the last crisis in two thousand eight and there were always people who just the lenders couldn't reach out to you know they. Knew, they were behind, they thought they were in trouble, and so they docked there servicer at every turn and it's speculative. But people think that that's that's this population kind of fits into that camp and so there are some efforts to reach out to those people. I would also say that two hundred fifty thousand is relatively small. There's fifty three million mortgages in this country Million people have been on forbearance at some point since the crisis started were down, it's under four million. Now, most of the people who've exited forbearance are either performing on their mortgage or they have paid off their loan. So it's an alarming number. It's relatively small and the whole universe and the whole mortgage universe. But there is also a concern that as people kinda hit the six month period who still need help that the number would increase because they won't know they actually have to request the extension, the additional six months. What are the next steps to watch for in this forbearance program? What's on the horizon forbearance figures overall spiked In April, May I believe June and they've steadily declined since the summer or late summer and what will be interesting to watch whether or not that trend continues or you see more people who need help, and probably if you see that, you'll see more people kind of falling through the cracks here where they don't know how to get help that sort of based on macroeconomic trends. Major companies are laying people off tens of thousands of people, and that's I think the Big Question Mark Wall Street Journal reporter Andrew, Ackerman. Thanks a lot Andrew. Hey. Thanks for your

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