Why do you need to do COVID forbearance research? Because it appears that at least some forbearance programs could throw a monkey wrench into your clients’ plans to sell. If COVID hadn’t already done enough to disrupt our lives, here’s one more…
Don’t wait to do your COVD forbearance research.
Do it as soon as you take a listing or begin working with a buyer.
When millions of people were put out of work due to COVID-19, President Trump signed the CARES Act, part of which provided mortgage relief in the form of 180 days of loan forbearance on all government loans. The Act provided for a 180 day extension, if necessary.
Other mortgage loan providers followed suit.
Depending upon which articles you find to read, somewhere between 7 and 9% of all mortgage loans have been or are in forbearance. That equates to more than 3 ½ million homeowners with loans in forbearance. Which means – your buyers or sellers may be/have been among them.
We read that the missed payments on government loans could be repaid in installments, repaid with the final payments on a home being paid off over time, repaid through refinance, or repaid when the home was sold. Other lenders had their own repayment requirements.
It sounds good, but don’t assume. Do your COVID forbearance research.
This week an Active Rain article alerted us to the importance of doing COVID forbearance research. The agent was close to closing on a home purchase when he got a call from a lender working with his home buyers.
It seems that the buyers were selling their previous house to purchase the new one. The home they were selling had been under forbearance earlier in the year. The lender wanted to know if they had repaid their missed payments. According to this lender “…the loan must be paid current before being paid off at closing,” and the sellers must provide documentation to prove it.
This makes absolutely no sense to me, but when it comes to banks, they do what they do.
Your best course of action is to do your COVID forbearance research immediately. Perhaps reading your client’s forbearance documents will tell you enough. However, if the answers aren’t clear, do take the document to an attorney to read.
You can (should) also contact their loan servicer to see if there’s a problem headed your way. It could be that the closer or someone at the bank has misread a document and is demanding a repayment that isn’t due until closing. If you find out well ahead of time, perhaps you can enlighten them – or have your client’s attorney enlighten them.
Remember that forewarned is forearmed.
Go ahead and prospect to those homeowners…
When I wrote the COVID Struggling Homeowner prospecting letter set, it was with the understanding that these homeowners could sell while their homes were still in forbearance. I think many still can, but it will depend upon the loan program they are under.
They do still need your help, perhaps more than ever. So go after the listings, then do the research and communicate with their lenders. From everything I’m reading, the banks aren’t anxious to begin mass foreclosures again.
What if you’re not the agent working with the buyer?
Today it’s common for two agents to be involved, so share this caution with the buyer’s agent. If their clients are selling a house to purchase your listing, they could be affected.
Today, COVID forbearance research on both buyer and seller needs to be part of the cooperative effort between listing agents and buyers’ agents.
There is a time for competitiveness and tough negotiating, but this isn’t it. This is a time to for all parties to be well-informed, so you can work at solving the problem if it exists.
Image courtesy of dragancfm at FreeDigitalPhotos.net
Research image courtesy of stuart miles @ freedigitalphotos.net