Some borrowers report being told a balloon payment is required
WASHINGTON, D.C. – In letters sent to the top mortgage servicers, Consumer Reports called on them to ensure borrowers seeking mortgage relief during the current coronavirus crisis are not misinformed by customer service representatives that they will be required to make a balloon payment at the end of the forbearance period.
Consumer Reports has heard from dozens of struggling borrowers that they have been told that they must pay a lump sum to make up for the skipped payments, contrary to federal guidance and their mortgage servicer’s own policies. Numerous recent news stories have also reported that borrowers are being told a lump sum payment will be required.
“It’s troubling that borrowers are being misinformed about post-forbearance repayment options when they desperately need financial relief as a result of the current pandemic,” said Christina Tetreault, manager of financial policy for Consumer Reports. “Nobody should face unnecessary hardship due to this extraordinary public health emergency. Mortgage loan servicers must ensure that their staff are properly trained to inform borrowers of the full range of more manageable repayment options when forbearance ends.”
Consumer Reports’ letter notes that federal guidance requires servicers to contact borrowers before their forbearance period ends to discuss the specifics of the borrower’s situation and determine a way forward. At the outset of a forbearance period, servicers must explain the range of post-forbearance options. There is no requirement that the servicer demand a balloon payment.
CR sent letters to Bank of America, Chase, First Republic Bank, Lakeview, LoanCare, Mr. Cooper, New Residential (aka New Rez), Ocwen, Quicken (aka RocketMortgage), US Bank, and Wells Fargo.
Consumer Reports can connect reporters with consumers who were misinformed that they would have to make a lump sum payment at the end of the mortgage forbearance period.
Michael McCauley: michael.mccauley@consumer.org or 415-902-9537