March 31, 2020 at 9:54am | Mac Rogers
There's been talk of a mortgage relief program or mortgage forbearance. I've gotten calls from my clients asking about it. It's pretty new and there's little information about it so far. I'll tell you what I know so that you can have an idea if this is something you need to pursue or how to pursue. I'll also give you an update on what the experts are talking about as far as where we are headed.

Thank you for watching this video. I'm Mac with Albert Rogers Realty here in Castro Valley CA.

Quick caveat. Things are moving and changing rapidly. By the time you watch this things might have changed already so be sure to subscribe, like and follow so you can get updates.

With this thing that is going on right now, it's really wrecking havoc on our economy and disrupting our lives. Everything is pretty much on hold or on pause right now.

Make no mistake this is a pause for now because before this thing hit us, there was nothing fundamentally wrong with our economy. Back in mid February, the talk was, what could derail this longest and unprecedented bull market that we have.

This quickly became the quickest decline ever in history. And the unfortunate thing about this is that it cannot be quantified or modeled. Fear, the behavior and sentiment of the population is what is moving this market. The good news is that it does not move the markets in the long run but can certainly over power it like we see today.

The consensus is that this is not the worse thing that can happen to us but certainly can plan for it.

Congress has put together a stimulus package to reverse or slow down our decline and also alleviate the fear that most people are going through right now.

The one thing that has been talked about is a mortgage relieve or forbearance. Part of it is also a moratorium on foreclosures.

As I mentioned it is so new that there's not a lot known about it so far.

Let's start with what a mortgage forbearance is.

This is an agreement between a mortgage lender and the borrower in which the lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower current on his or her mortgage. Something like this was being done back in 2008 in the form of loan modifications.

Homeowners that have been impacted by the coronavirus who have lost income or their jobs can be eligible to have their mortgage payments reduced or suspended. The talk is up to 90 days but I'm hearing up to 1 year as well. Now obviously it all depends on their particular circumstances.

Here's a very important thing to note, don't just stop making your mortgage payments. You need to contact your lender and make sure that you document this agreement. This is a deferral program NOT forgiveness.

Some of the things that are being discussed as far as how to handle the missed payments, payments be made at the end of the life of the loan and there would be no interest accrued on the deferred amount, certainly lump sum payments have been discussed as well. Again they are saying 90 days or up-to 12 months for the forbearance period.

Another thing being discussed is the streamlined process of getting this done. The last time lenders were modifying loans, borrowers were being asked to document everything. This time around they want to make it easier.

Another good thing about this is that your credit should not be affected if you get into an agreement with your lender. Your lender cannot report or should not be reporting your missed mortgage payments to the credit bureaus.

So talk to your lender. Be prepared to wait not just minutes but hours. I will update this information as soon as it becomes available to us. Be sure to like, subscribe and follow so you get notified.

So now where does this leave us? Is real estate going to implode like the last time? The experts are not forecasting that right now.

When the equity markets go haywire like this, capital tends to go into tangible assets. You know like gold or in this case real estate. Stocks can go to zero and you are left holding nothing while gold and real estate are tangible.

What's happening right now is different from the 2001 tech crash or the 2008 mortgage melt down because there are two external forces that are affecting the markets. The coronavirus and the Saudis going up against the Russians and flooding the oil market and driving prices down.

These are temporary shocks unlike the tech crash, there was excess valuation of companies with no earnings to show for or the mortgage meltdown where there was lax underwriting and there was an excess of consumer debt. Consumers were cashing out like crazy and using their homes like it was a virtual ATM.

The consensus is that we still end up with positive growth once this virus is sorted out. We will sort this out. It will be painful. We all have to pull together and help each other. This is a wake-up call.

I hope that you find this information useful. If you have any questions, don't hesitate to reach out to us.

Stay safe. God bless us all.
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