US Orders Up To One Year Interruption On Mortgage Payments: NPR



DAVID GREENE, HOST:

Very good. We have reassuring news this morning for homeowners across the country. The federal government is telling lenders to give people a one-year break on their mortgages if they have lost income due to the pandemic. This is Chris Arnold from NPR.

CHRIS ARNOLD, BYLINE: The way it should work is if you’ve been hurt financially, you can make reduced mortgage payments or get a full suspension of payments for up to 12 months. Mark Calabria is the director of the Federal Housing Finance Agency. But he says – and this is really important – that people can’t just stop making mortgage payments. There are steps to follow.

MARK CALABRIA: They have to contact their managing agent – that is, the lender to whom they send the check each month and with whom they deal. And that lender will work with them to be able to work out a payment plan. Obviously, we hope to get them back on their feet as soon as possible.

ARNOLD: Since things are going so fast, Calabria says to qualify you can just call your lender and tell them I lost my job or half of my income or whatever happened. And documenting the difficulties can come later.

CALABRIA: You won’t have to send 20 pieces of paper at the start. We want to do it quickly.

ARNOLD: Technically, that covers about half of all home loans in the country – those guaranteed by mortgage giants Fannie Mae and Freddie Mac. But regulators expect the entire industry to quickly adopt a similar policy. Wells Fargo and JPMorgan Chase say they will work with borrowers who cannot make payments.

For all of this to work properly, lenders will have to follow through and do what the government asks them to do. It is not free money either. Homeowners will develop a repayment plan once they have recovered financially. This could simply involve extending the term of the loan.

CHRIS MAYER: I think that’s a great first step.

ARNOLD: Chris Mayer is a real estate economist at Columbia University School of Business. He says that should reassure a lot of people.

MAYER: It’s extremely important at this point, so we just don’t have mass panic and we don’t have people, you know, worried about the potential of losing their homes.

ARNOLD: Also if you call and get into one of these plans, Fannie and Freddie tell lenders not to report missed payments to the credit bureaus. And Mayer says that’s a really big deal, too. He says it would be bad for the economy if millions of people get their credit ratings wiped out because of a pandemic they absolutely could not control.

MAYER: We don’t want people to suddenly be declared delinquent and lose their access to credit. And then all of a sudden we have a problem that is not a three or six month problem. Then all of a sudden we have a much deeper and bigger problem.

ARNOLD: But again, if homeowners don’t contact their lender and get approved for it, the missing payments will seriously damage their credit. You need to contact your lender and tell them, I need help. Lenders are also putting an end to foreclosures. OKAY. So all of this is good news for homeowners. But for tenants, so far many cities say they end evictions if tenants can’t pay. But that’s about it, says Laurie Goodman of the Urban Institute.

LAURIE GOODMAN: There have been very, very few measures taken for tenants. And in fact, the renter population is much more vulnerable than the owner population because, on average, they are just much, much less well off, have much less savings.

ARNOLD: Goodman would like to see some kind of federal tenant assistance program.

Chris Arnold, NPR News.

(EXCLUSION OF ITS “NAUTICAL” OF KUPLA AND PHILANTHROPE)

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