Mortgage Relief That Comes With a $4,000 Bill

Nearly 70 percent of homeowners with mortgages have loans somehow supported by the federal government. Fannie Mae and Freddie Mac, two government-sponsored entities, buy many loans from lenders and package them into investments that are akin to government bonds. Other borrowers who often put less money down have their loans insured by the Federal Housing Administration. Because of the government’s involvement in those loans, regulators have laid out options available to borrowers who must skip payments, and in almost all cases they can push back what they owe until the home is sold or refinanced or when the loan term is up.

The situation is often murkier for borrowers, like Carla Knight of Queens, whose loans are held by private investors.

Until recently, Ms. Knight, 50, worked as a paraprofessional caring for mentally challenged children while they rode on a school bus that now sits idle. Her paycheck was reduced before she was laid off completely on May 4.

After her pay cut, Ms. Knight called her mortgage servicer, Mr. Cooper, which said it would provide a three-month forbearance on her $198,000 loan with a lump-sum payment due when she restarted payments.

She called again after she was laid off, and the servicer extended her forbearance to six months — but she’d still owe a lump-sum payment. Come September, Ms. Knight said, she would owe roughly $13,500. If she isn’t allowed to push that back, her only alternative is to pursue a loan modification, which could, for example, allow her to extend the length of her mortgage. But that’s a more complicated process and often requires an application.

The uncertainty is unsettling. Ms. Knight, who lives with her 13-year-old twins and granddaughter in a four-bedroom home, said she had asked the company if the payments could be tacked on to the end of her mortgage. “But they keep telling me they have modifications,” she said.

Article source: https://www.nytimes.com/2020/05/15/business/coronavirus-mortgage-relief.html