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Stimulus Plan and forebearance credit reporting

Mland-EC
Established Member

Stimulus Plan and forebearance credit reporting

Stimulus Plan and credit reporting of forbearance.

People that are in COVID forbearance for mortgage means that late payments are not being reported  to the credit agencies, this is in the first stimulus plan.

May 1st 2021 that is over, if someone was in or is in forbearance and even if that forbearance is agreed upon with the mortgage company and good until say August 2021, on May 1st 2021 the mortgage company can and are going to start reporting the current payment status.

This means that even though you don't have to pay as agreed if you are 6 months behind you are going to have a severe credit score plunge when 6 payments behind is reported. Right now the only way out of this is to come up with a plan with the mortgage company of new legal terms like a refinance or other terms. I am told the other terms (other than a full refi) will not protect the credit only keeping the home. At least with dad's mortgage company. It is an FHA loan.

Working with my dad’s mortgage company for him I was told they would place 6 payments on the end and never come after him to take his home unless he fell behind more than that. That is too much pressure, one late and they are sending foreclosure papers.

They stated that his credit would always show this 6-month behind! He can’t do a refi because he lost his job and now with heart trouble is on SS, he can’t work and does not make enough to refi so he won’t get approved! He has mulitple conditions where covid would kill him,  I don't want him back on the job anyhow.  He can keep current now since SS has fully kicked in, it's only the bakpayments he can not ever come up with. Now I need try to come up with 14K in cash for him or let his credit dissolve and I only have until May 1 to do this! I was saving up to bring him current, I thought I had until August 31 to come up with his arrearage(his forbearance agreement ends then) . I never knew about this May 1 reproting date.


My question is:

Does anyone know if the  plan extends the May1 credit reporting date.

Message 1 of 25
24 REPLIES 24
Save-n-Invest
Frequent Contributor

Re: Stimulus Plan and forebearance credit reporting

I'm sorry you and your dad are dealing this mortgage forbearance issue in addition to his health concerns. 

 

I don't know what is in the Senate version of the bill. The Senate made changes before passing the bill. The bill will be sent to the House to vote on the changes. It's not a done deal yet. I wish I had better information to offer.

 

Has your dad been vaccinated for COVID? If he is not eligible by age perhaps his medical conditions give him the opportunity for a vaccine. He would at least be  protected on the COVID issue. One less worry for you. 

 

You are wonderful to help your dad with this. I am sorry both of you have mortgage/credit issues to address in addition to his health concerns. 

Message 2 of 25
Mland-EC
Established Member

Re: Stimulus Plan and forebearance credit reporting

It is riduculous here, he is 76 and no vaccination.

Thanks for the concerns and comment!

Message 3 of 25
KatSoDak
Regular Contributor

Re: Stimulus Plan and forebearance credit reporting

https://www.experian.com/blogs/ask-experian/how-the-cares-act-affects-credit-reports-and-scores/

 

My take on it is the loan should continue to be marked "current" if he was not in arrears when he obtained the forbearance/deferment 



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Message 4 of 25
Mland-EC
Established Member

Re: Stimulus Plan and forebearance credit reporting

Thats the old one and it lapses May 1. You are right but only if he becomes current somehow.

According to the mortage comany He will not be marked current unless he has a new formal arrangment and that requires a credit chceck,  a 600.00 upfront  home appraisel with no garantee he wiil get approved.  He is not going to get  approved for refi with his credit situation current income and DTI .

I have the letter, it states work out new loan terms or they are reporting May 1. I called and and he does not qualify for those new terms! So far it seems I need put 14 k on a credit card and take the the hit. If they bump it a few more months I could pay the 14 k far easier.

Funniest thing is when they ran the numbers using what he made before he had to go on SS they were coming up with a plan that tacked on the 14k he is behind to the prcinciple and the monthly payment is near 300 MORE a month! It is outragous, that is not assitence for someon that never made a late payment as far as I can see on his credit report for anything, ever.  That being said he didnt use credit much unitl COVID hit so his score is only 725 Tranunion FICO, 711 for the others(his mortage score wappears to be 680 ish which is a huge drop from 18 months ago ). Bt now some of his cards are at 70% utilization, I guess I need pay those down too. .


They literally said to me,  sell the place.

The main thing for us is we worked so hard to get our credit better and this can litielly put us  back to square one if we need tap a card to 90% utiilization pay this off. Dam Covid.

Message 5 of 25
OmarR
Established Contributor

Re: Stimulus Plan and forebearance credit reporting

The wife and I have been blessed in that fact that we have not had any financial difficulties in 2020, so I am a little ignorant when it comes this subject.

 

For the hundreds of thousands of people that took a mortgage forbearance, are they ALL facing being marked as XXX days lates on their credit reports?!?

    EQ=850        TU=837         EX=837      INQ=0/0/0     UTIL=$1        AZEO


Message 6 of 25
Cowboys4Life
New Contributor

Re: Stimulus Plan and forebearance credit reporting


@OmarR wrote:

The wife and I have been blessed in that fact that we have not had any financial difficulties in 2020, so I am a little ignorant when it comes this subject.

 

For the hundreds of thousands of people that took a mortgage forbearance, are they ALL facing being marked as XXX days lates on their credit reports?!?


I too am fortunate to have come through this better off.  DO NOT quote me on this but my understanding is that mortgage payments can be deferred or in forbearance until May 1.  That meant during this time they would not be marked as late or subject to foreclosure.  HOWEVER, that did not also mean an automatic pass on the payments.  The consumer had to work out a payment plan that COULD include simply deferring them to the end of the mortgage and delaying the payoff date by the number of months deferred.  Those consumers who cannot work out a financial solution with their mortgage lender and cannot bring the payments current would then be subject to the credit reporting for that period showing the payments as late and yes, could be subject to foreclosure.

Message 7 of 25
Cowboys4Life
New Contributor

Re: Stimulus Plan and forebearance credit reporting


@Mland-EC wrote:

Thats the old one and it lapses May 1. You are right but only if he becomes current somehow.

Funniest thing is when they ran the numbers using what he made before he had to go on SS they were coming up with a plan that tacked on the 14k he is behind to the prcinciple and the monthly payment is near 300 MORE a month! It is outragous, that is not assitence for someon that never made a late payment as far as I can see on his credit report for anything, ever. 


Yes, restructuring the arrears means the payment will go up.  Unfortunately there isn't much of a way around this once you get in to 6 months or more in missing payments.

 

Not to be the Debbie Downer but it isn't outrageous. (Mod cut - not here, please.  The 5 Things We Don't Talk About).  His never having made late payment is great but has little reflection on his ability to pay the outstanding obligation with the material change in his income and earning potential.  "Assistance" is a subjective terms and it isn't uncommon for the "assistance" a consumer NEEDS or wants to be something the creditor simply cannot do.  That doesn't mean that it is outrageous but there is only so far they can go.  It isn't personal.  It is business.  It sucks that some people are indeed going to lose their homes (Mod cut - see above).   

 

If selling the home and paying off the arrears would allow him to rent something now and preserve his credit you might seriously look in to that.  Homes are selling at a phenomenal pace.  This could possible be done in less than a month.

Message 8 of 25
OmarR
Established Contributor

Re: Stimulus Plan and forebearance credit reporting


@Cowboys4Life wrote:

@OmarR wrote:

The wife and I have been blessed in that fact that we have not had any financial difficulties in 2020, so I am a little ignorant when it comes this subject.

 

For the hundreds of thousands of people that took a mortgage forbearance, are they ALL facing being marked as XXX days lates on their credit reports?!?


I too am fortunate to have come through this better off.  DO NOT quote me on this but my understanding is that mortgage payments can be deferred or in forbearance until May 1.  That meant during this time they would not be marked as late or subject to foreclosure.  HOWEVER, that did not also mean an automatic pass on the payments.  The consumer had to work out a payment plan that COULD include simply deferring them to the end of the mortgage and delaying the payoff date by the number of months deferred.  Those consumers who cannot work out a financial solution with their mortgage lender and cannot bring the payments current would then be subject to the credit reporting for that period showing the payments as late and yes, could be subject to foreclosure.


 

I guess I just assumed that everyone got a 6 month pass/pause, with normal payments resuming at the end of that 6 month period. And, of course, you extended your mortgage by 6 months on the backend. Maybe some small fee tacked on.

 

If there are situations where the paused payments are all due at the end of the 6 months, I think there are going to be a lot of people that are going to be in trouble.

    EQ=850        TU=837         EX=837      INQ=0/0/0     UTIL=$1        AZEO


Message 9 of 25
KatSoDak
Regular Contributor

Re: Stimulus Plan and forebearance credit reporting

Has the lender been reporting the account as current during the time he was in forbearance?  If so, how can they then report a late payment the month his payments resume?  Seems like they would be using the codes set up by the CRAs to indicate disaster. Did they defer the payments or not?



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Message 10 of 25
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