Consumer Reports urges mortgage servicers to inform borrowers of full repayment options
WASHINGTON, D.C. – Consumer Reports applauded the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac today for making clear that mortgage borrowers who obtain a forbearance due to the coronavirus crisis are not required to make a balloon payment when relief ends. CR called on mortgage servicers last week to clear up the confusion over this issue after numerous borrowers reported being told that a balloon payment would be required.
“Many Americans desperately need a break on their mortgages during this unprecedented economic crisis but are being misinformed about their repayment options when forbearance ends,” said Christina Tetreault, manager of financial policy for Consumer Reports. “People are telling us they’ve been told they can defer payments on their mortgages, but they’ll have to pay a huge balloon payment when that period ends, and that’s just not the case. Mortgage loan servicers must ensure that borrowers know that a balloon payment is not required and are made aware of the full range of repayment options at the end of the forbearance period.”
The statements released today by Fannie Mae, Freddie Mac, and FHFA today noted that borrowers with federally-backed mortgages are not required to pay everything back at once in a balloon payment when forbearance ends. Mortgage servicers will contact borrowers 30 days before the end of forbearance to go over repayment options. If the borrower is not able to resume paying their mortgage, forbearance can be extended for an additional 180 days.
As the FHFA noted in its statement today, if the borrower is able to begin paying their mortgage again, the servicer will “set up a repayment plan, modify the loan so the borrower’s payments are added to the end of the mortgage, or set up a modification that reduces the borrower’s monthly mortgage payment.”
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.