Accept mortgage payment suspension if still employed?

Well, half a fudge. My rental is federal. Servicer = investor on my primary… unless it hasn’t been sold yet since I just refi’d… fingers crossed.

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You just refi’ed, give it a little time on the new loan. Some originators sell in monthly batches to Fannie and Freddie. After your loan originates, it goes through a bunch of quality checks on the underwriting, paperwork, etc. before it gets sold. If you went through a correspondent, you’ll often see the investor change from the Originator -> Correspondent (who is likely your servicer) -> Fannie/Freddie… so it may switch a few times.

For me, my last refi was almost instantaneous, but a previous one took a month and a half before Fannie bought the loan. Fannie/Freddie have their own search engines, but my experience has been that MERS will always have the latest information.

If you took out a conforming loan, there’s a very high likelihood that it’ll eventually end up in Fannie or Freddie’s portfolio.

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“Borrowers are eligible for forbearance regardless of whether their property is owner occupied, a second home or an investment property.”

from Freddie mac site

I’d guess Fannie mae is the same?

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How do I stop paying my mortgage when it’s on direct debit? :joy:

You call your loan servicer and they should stop drawing on your usual due date while in forebearance. Don’t worry by now, they should know what to do after receiving thousands of calls about it.

And maybe follow-up with an email, fax, or letter, keeping a copy for yourself.

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And if you have a student loan, don’t pay that either.

Well, don’t just stop paying. You have to inform the lender first.

ETA: my source was a BP Money podcast from Saturday, which could have been wrong.

Generally, if it’s a federally held loan, then you don’t have to do anything. https://www.cnn.com/2020/04/03/politics/student-loan-debt-suspension-economy/index.html

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The interest clock is still running in these forbearance measures, right? They’re just setting the required monthly to zero for x months?

Trying to determine if it’s free money or just free cash flow.

For mortgage forbearance, I believe interest still does accrue you just don’t have to make a payment for 90 days unless you re-extend the 90 day forbearance period, up to a total of 4 times (up to 1 year of no payments).

For student loan forbearance, interest does NOT accrue during the forbearance period. My wife’s student loans qualify automatically for this. Logged into her student loan account and verified. No payments or interest until Sept 30th, 6 months of student loan forbearance. At that time her automatic payment will resume as usual.

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There’s a good Bloomberg article that explains why mortgage servicers are dragging their feet here: https://www.bloomberg.com/news/articles/2020-04-02/u-s-holds-off-on-extending-virus-aid-to-mortgage-servicers

When you originate a conforming mortgage as the actual lender (and not as a correspondent that uses a warehouse line of credit just to turn around and sell the loan to one of the big guys), you can sell servicing rights to a third party, or you can retain them. If you retain the rights, Fannie/Freddie will pay you a commission to collect the money, which it then forwards on to MBS investors. You also get to keep most fees as a servicer, including late fees. This is usually a nice business to be in - you’re a middle man that collects money and forwards it on to GSEs, taxing authorities, and insurance companies. When a borrower doesn’t pay, you sick the trustee on them and then deal with the fallout (and usually collect a nice set of fees from Fannie along the way).

Well, this new program is gonna wreak havoc on servicers. When a borrower is late, the servicer is still expected to pay Fannie/Freddie. This money is fronted - i.e. Fannie/Freddie eventually reimburse the servicer if the borrower doesn’t end up paying, but until they do, the servicer has to pay it out. This new program is no different - servicers still have to front cash to the GSEs. Well, where’s that cash coming from? Many of these non-bank servicers, like Provident, Quicken Loans, PennyMac, Mr. Cooper, etc don’t have that much money to front. So they’re now asking for a bailout from the feds as a result of this program.

This explains why all of your servicers aren’t chomping at the bit to offer you this program, and the mortgage market is going to be in a world of hurt if something doesn’t change with this, quickly.

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I just checked and it looks like major banks (Chase, WellsFargo) and servicers (Provident, MrCooper (formerly Nationstar), PennyMac) and a few smaller ones I looked at already have their websites set up to allow you to sign up for forbearance online. You just login to your account and click a few buttons.

I think at this point the only consideration is what might signing up for forbearance mean for one’s ability to refinance while in forbearance. I believe generally it’s not allowed, and at least one website said as much, but it’s not clear whether that only applies to an “internal” refi. With the 10-yr note yield being so low and new mortgage applications dropping, I would expect refi rates to keep dropping to historic lows towards 2.0% for 30-yr. On the other hand I just refi’d so I have at least 4 months before applying again (due to 6-mo seasoning requirements).

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I didn’t research it but…
I can’t imagine that the stimulus / bailout would be structured so that the loan services have to front all the money for forbearance for up to a year. If Freddie/Fannie haven’t already suspended those payment requirements from the servicers then I assume its just a technicality they’ll communicate.

I think it is more likely the services are losing their income stream and fees from the loans in forbearance. So they get no profit.

Plus they weren’t prepared, they wren’t clear on how it works, they didn’t get communication down to the front line fast plus the system is SUPPOSED to be for people who really NEED it so they’re supposed to be asking people about what the hardship is and why it is needed. That all looked like feet dragging.

But as Scripta points out now you can login and click click and its done.

If this piece is accurate, Ginnie Mae (FHA, VA, etc) does have an advance program for servicers, while Fannie and Freddie haven’t set anything up yet:

I mean, the article makes a good point. WTF happens if everyone, regardless of hardship, asks for forbearance?

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I think we can safely dismiss that theoretical.

Homeowners aren’t getting a free ride with forebearance. Interest accrues and the payments are due eventually. Might be great for cashflow but thats it.

I’m sure some / many will sign up ccause they wan’t the money now or think its free. The vast majority won’t.

Even if people do sign up in droves then there result will just be government bailout #4 or 5 or 8…

I mean aren’t the GSEs already insolvent and just propped up by the Treasury after the 2008 crash? I mean whats another 1/2 trillion of debt gonna do ? We might as well throw in a couple tax cuts for billionaires and another unwinnable war in a desert nation while we are at it…

The forbearance is a free recast / reamortization with cashout. I think it’s gonna be very popular with rental property owners / real estate investors.

Yup. I expect people to jump on it… and without some kind of advance from Fannie or Freddie, I have no idea how servicers are going to advance the cash to MBS holders.

Very good info and also interesting that “internal” refi with the same lender may not be as good as external ones. Since servicer is not supposed to report you late to the credit reporting agencies, while in this forebearance program, an external lender would not know whether you’re in forebearance or not so you may still be able to refinance.

Although if you’re truly experiencing income disruption, the income verification step (say last 2-3 pay statements) may rule you out if you’ve been out of a job for a while already. Which makes me wonder if the loss of income experienced by many is not gonna slow down refis pretty soon. I’m hoping this is the case and that pushes rates to where they should be considering 10-yr note yield and current MBS market.

Alternatively, you could also not sit this one out waiting for rates to go down. It’s stated that you can recontact your servicer once your income situation is resolved so you could go into forebearance now, then once the rates are low enough, resolve the situation with your lender and that should clear obstacles to a refi, internal or otherwise, no?

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The problem is that the payoff statement from the current lender will most likely include any unpaid or capitalized interest. The devil is in the details. If it’s capitalized monthly / baked into the outstanding principal balance, then great. But if it’s listed as a separate line item, it could raise questions.

That’s true, this should help, but it could take time (days-weeks) to completely resolve the forbearance.