Five Big Banks Suspend Mortgage Payments
Five of the nation’s largest banks have agreed to temporarily suspend residential mortgage payments for people affected by the coronavirus, California Gov. Gavin Newsom said Wednesday. The announcement came as Newsom provided yet another grim statistic about the economic devastation from the virus: 1 million Californians have filed for unemployment benefits since March 13 as businesses shut down or dramatically scaled back because of a statewide “stay-at-home” order to prevent the spread of the virus. Meanwhile, Newsom said California is rapidly expanding its supply of equipment for health care workers and hospital beds in anticipation of the expected surge in patients that will come as more people are infected. Testing for the virus is accelerating quickly as the state adds locations for the public to get checked. “We are leaning in to meet this moment,” Newsom said. Wells Fargo, US Bank, Citi and JP Morgan Chase will defer mortgage payments for three months. State chartered banks and credit unions will offer similar deferrals. The banks also pledged not to initiate foreclosure sales or evictions for the next 60 days. And they promised not to report late payments to credit reporting agencies. [as reported in Credit & Collection e-newsletter of 3/26/20]
Comment on this by The Bankruptcy Law Firm, PC: Banks “deferring” mortgage payments for 3 months does NOT mean those 3 months of payments are forgiven or no longer owed. It just means that the borrower has to pay those 3 months of payments later, in addition to the borrower will have to pay the monthly payments that come due, after the 3 months “deferral” period. Which means the borrower will likely have to pay double payments, down the road, after the 3 months “deferral” period ends. “Deferral” of monthly mortgage payments can be a trap for the unwary borrower, rather than an aid to the borrower. Borrowers who cannot afford to pay their monthly mortgage payments for 3 months “deferral” period, likely cannot afford to pay double monthly payments, for the successive months.