Interesting conversation with my bank

[sugcarol]

This morning I had talked with my personal banker at Chase. I mentioned about the forgiveness of payments/foreclosures and utilities during this shutdown period. He told me that people need to pay as much as they can while this is happening because once the deferment is lifted ALL will be due and foreclosures that were in the works will be foreclosed with no recourse. Utilities when lifted from deferred payments will be due that day or will be shut off. Sounds pretty cold and told him so but he said not enough info has been given to the public about this. You can google to read more about this.

 

[jamescanuck2001]

Payment deferrals often accrue interest during the deferral period. No free money!

I got an email from the bank yesterday offering a 6 month deferral of mortgage payments. I have no need, but opened the fine print and yep, interest will accrue for the deferral period. A sly way for a bank to try to make more money.

 

[TDSAXX]

Getting a deferral on a mortgage that was current before the pandemic and a mortgage that was already in foreclosure or about to be are two entirely different situations.

 

[jamescanuck2001]

Getting a deferral on a mortgage that was current before the pandemic and a mortgage that was already in foreclosure or about to be are two entirely different situations.

OP refers to both.

 

[TDSAXX]

OP refers to both.

Many banks are just tacking the missed payments on to the end of the mortgage.

 

[JimMIA]

We don't need to defer anything, but I think your banker gave you very sound advice. Eventually, everyone will have to pay everything they owe. "Deferred" does not mean "forgiven."

So the sound advice is to do the best you can. You'll be better off for it later.

 

[thanxfornoticin]

Utilities - especially electric companies - will go to great lengths before shutting off service. Even if a customer can pay some part of a bill, and work out a plan to pay it off over time, the lights and heat will stay on.

 

[RamblingMad]

This morning I had talked with my personal banker at Chase. I mentioned about the forgiveness of payments/foreclosures and utilities during this shutdown period. He told me that people need to pay as much as they can while this is happening because once the deferment is lifted ALL will be due and foreclosures that were in the works will be foreclosed with no recourse. Utilities when lifted from deferred payments will be due that day or will be shut off. Sounds pretty cold and told him so but he said not enough info has been given to the public about this. You can google to read more about this.

Sounds right to me.

Lenders are deferring because they really don’t want to charge you off due to a pandemic. They’re trying to save the loan. And this is far better for the borrower’s credit score. But I wouldn’t do this unless I had too.

 

[buzznina]

I wish all mortgage companies would just add the month's to the end of the loan, except there are a lot that aren't. Mr. Cooper is one of the biggest and they are saying that after the 3 or 6 month deferral is over that 1 of 3 things can happen. 1) All those payments will be due at that time. 2) Work out an additional monthly payment plan or 3) Payments will be added to the end of the loan.
Once this is over look for a LOT of bankruptcy's to be filed

 

[tvguy]

Bottom line, there is no free lunch, ever.

 

[mi*vida*loca]

Many banks are just tacking the missed payments on to the end of the mortgage.

If you specifically ask. My mortgage company states payments will be due in 3 months. Then in fine print it mentions tacking them on to the end of the mortgage. I’m sure some people won’t even know to ask and get screwed.

I mentioned in another thread that not being evicted or getting your utilities shut off is only temporary. When all of these restrictions are lifted landlords are going to want their money yesterday. Same with utilities. Even if you can work out a payment plan with your utility company, if you still aren’t helping how’s that going to help if you haven’t even been able to pay your regular bill. Especially for so many people who haven’t been working and who’s jobs are lost forever. Not every job lost is going to come back.

 

[mnrose]

I saw a Dave Ramsey column with this advice. PLEASE don't think your 1200 is "free mad money" and an excuse not to pay your rent/mortgage because you can't be immediately foreclosed ... because EVENTUALLY you WILL have to pay those things and any new purse or shoes you buy now, won't help you pay those bills later. It was a bit of tough love. EVERYONE should still try to pay their obligations as best they can, even if it's only a partial payment.

 

[pens4821]

It all makes sense though. I don't think anyone really expected them to just write off a couple months of bills, and they shouldn't. At the same time, there needs to be methods for repayment and they need to work with people. Mortgages/car loans are easy because they can just tack them on to the end. Credit card bills can just continue as usual just without any penalties for no payment in those months. Utilities are a little trickier, but a small increase in your bill for a year or so should make that not too hard to repay. You need to call and discuss these options NOW if you're having problems.

I don't think someone that has paid their full utility bill up until the last 2 months is all of a sudden going to have their power/water shut off. They will for sure work with you. Now, maybe people that were already going to be shut off/evicted/etc they will, but I doubt the person who just came upon a hard time recently will.

 

[BuckeyeBama]

The reality - most people sell their homes long before they finish paying off the mortgage. Deferring the payments to the end of the mortgage is not a bad idea if you plan to sell within a few years. You won't care that you have more payments that you never got to pay, and very little of your monthly payments actually apply to the owed amount anyway.

So, if you think you might lose your job or you plan on selling soon (or both), defer to the end of the mortgage if given the option.

 

[Jennasis]

Everyone should do the research. There are options for repayment that aren't a balloon payment...but none of the options are free money/loan forgiveness.

 

[MillauFr]

Bottom line, there is no free lunch, ever.

Except for Wall St. bankers during the housing market collapse. They got bailed out even though it was their own bad decisions are greedy practices that caused massive losses for their companies.

 

[RamblingMad]

Except for Wall St. bankers during the housing market collapse. They got bailed out even though it was their own bad decisions are greedy practices that caused massive losses for their companies.

Because the alternative was much worse.

 

[sam_gordon]

The reality - most people sell their homes long before they finish paying off the mortgage. Deferring the payments to the end of the mortgage is not a bad idea if you plan to sell within a few years. You won't care that you have more payments that you never got to pay, and very little of your monthly payments actually apply to the owed amount anyway.

So, if you think you might lose your job or you plan on selling soon (or both), defer to the end of the mortgage if given the option.

You still "pay" though.

Let's say you have a $100,000 mortgage with a $1,000 payment (just keeping numbers simple). You make $25,000 worth of payments. Then the pandemic hits and you shift five months to the "end" of the loan. You sell before needing to make another payment. You still have to pay $75,000 to pay off the loan. That comes out of the sale.

But, under the same conditions, you don't shift five months of payments and you sell. Now you owe $70,000, which comes out of the sale.

Either way, you've made $5000 in payments.

 

[MillauFr]

Because the alternative was much worse.

Agreed. It is hard though for the person struggling to pay the rent seeing billionaires getting government handouts.

 

[RamblingMad]

Agreed. It is hard though for the person struggling to pay the rent seeing billionaires getting government handouts.

I get that.