Man Eaglin

Man Eaglin

Broker-Associate & REALTOR DRE #01248452 Counselor of Real Estate English
41463 Margarita Rd. Suite 100 Temecula CA 92591
(760) 917-9900

Freedom From Covid-19: How to Deal with Your Creditors

By Man Eaglin - May 14, 2020

Tip: How to deal with creditors making payments if you are struggling with finances over Covid-19 lockdown

Creditors (NON-Mortgage):

Some of our clients struggling with payments to creditors. Mentioned that they were approved up to 3, 6 or 9 months no payment due. After they simply said they have fallen ill with Covid-19. And are on quarantine.

No red tape, No questions Asked.

Some other clients have shared they just told creditors they have a hardship, and they didn’t receive as much help. And had to jump through a lot of red tape and questions.

Contact your utility companies first as well as cell phone carrier. And ask them what they can do to offer relief as you don’t want to default on payments but you have no options left.

What can they do for you?

Be ready to explain what your budget is and what you can do. To give them an idea where you are at.

Utility companies don’t report to the bureaus until it goes to collections. Which will buy you more time. If you subscribe to Experian score boost and have added this feature. You must cancel it and remove all the trade lines they added. Otherwise, if you're late with utilities or rental it will show on your credit file.

Each creditor is doing different things to help, and are constantly changing day by day.

Mortgages:

I want to cover some VERY important information about mortgage forbearance options that you could be looking to qualify for.

There is A LOT of information swirling in the media, online, and in zoom meetings about this. There are going to be very specific circumstances that apply to borrowers. Those circumstances are all going to depend on who your servicer is, and if your loan is owned by Fannie Mae, Freddie Mac, Ginnie Mae or is a portfolio product. VA appears so far, to be much more flexible to the end of the loan. Yeah, all sounds like Greek right??

There is a MASSIVE difference between a forbearance and a deferment or forgiveness. Too many terms are being thrown around and we don’t want to see anyone unintentionally get in trouble.

If you are experiencing a true hardship and do not think you will be able to make your monthly mortgage payment, please give your servicer (who you make your payment to) a call and ask about options. Until then, you…

MUST MAKE YOUR MORTGAGE PAYMENT

A forbearance is simply a PAUSE in time, which could be 90 or 180 days where you have an agreement in place with your servicer to NOT make your scheduled payment. The payment(s) that were missed would then either be due in FULL at the end of the agreed-upon period or can be worked out as a payment plan over an extended period of time. My guess is that most servicers will opt for a balloon payment at the end of the forbearance period. They are going to be cash hungry and need that injection of liquidity after having multiple borrowers not paying on a normal schedule.

One example of how this can be a DANGEROUS road to go down –

  • 2,500 monthly mortgage payment.
  • April 1st payment is due (most cases, due on 1st, late by the 16th).
  • A borrower applies for forbearance (not all applications will be approved).
  • 3-month Forbearance granted, no payment due for April, May, or June 2020. 
  • July 1st, 2020. $10,000 balloon payment due to servicer ($7,500 for April-June + $2,500 July)
  • Missing this balloon or making a partial payment means you would immediately be eligible for FORECLOSURE. 

There is NO FREE MONEY here with forbearance plans folks. If at all possible, I would HIGHLY suggest that you continue making your normally scheduled payments just as you would have if this COVID-19 mess hadn’t happened. I know that might be hard for some to hear, especially with mass layoffs, sickness, and uncertainty. 

JPMorgan Chase CEO expects ‘bad recession’ and financial strain akin to 2008

In his annual letter to shareholders, CEO and Chairman Jamie Dimon laid out what he expects will happen as a result of the pandemic, stating that the bank “cannot be immune to the effects of this kind of stress.” In the most adverse scenario that was run, GDP would be “down as much as 35%” and last through 2020, with unemployment “peaking at 14% in the fourth quarter.”

Useful credit card tips:

https://www.bankrate.com/finance/credit-cards/issuer-assistance-programs-amid-coronavirus-fears/

 

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