CORONAVIRUS MORTGAGE FORBEARANCE WARNING! FHA-OIG Busts Mortgage Servicers Deceiving Homeowners
MFI-Miami has issued a Coronavirus Mortgage Forbearance Warning! The FHA-OIG has issued a scathing report saying mortgage servicers are deceiving homeowners about Coronavirus Mortgage forbearance programs.
HUD and FHA refused to publicly say which mortgage servicers were deceiving homeowners. However, they did say they have put them on notice.
HUD-OIG said it reviewed the websites of the top 30 FHA servicers. These mortgage servicers account for 90.5% of all servicing on FHA loans.
The CARES Act stipulates that a borrower can request a 180-day forbearance by FHA or a GSE lender if they are experiencing a COVID-19-related hardship.
The FHA-OIG Report Said Coronavirus Mortgage Forbearance Information Offered By Mortgage Servicers Is Borderline Deceptive
The FHA-OIG stated that information was not clearly marked and is hard to find. The report also stated:
Additionally, some websites noted that contacts with servicers would likely be difficult and delayed, whether, by telephone, mail, email or the website, due to the volumes of contacts servicers are receiving. As such, complete, consistent, current, and clear information on servicers’ websites is all the more valuable.
The report also noted that ten of the servicers did not have information about forbearance readily available on their website.
Several servicers required borrowers to log in to their account before they could see information about forbearance. One servicer made no mention of forbearance on their website. Instead, the mortgage servicer pushed customers into refinancing or a short sale.
Mortgage servicers also had significant differences in the messaging about the forbearance period.
Only four of the 30 servicers indicated borrowers were only eligible for 180 days of forbearance. Only two mortgage servicers indicated borrowers could extend forbearance by an additional 180 days.
Some servicers listed the initial forbearance period as six months.
Meanwhile, six servicers listed 90 days as the initial forbearance period. While four additional servicers listed three months as the initial period.
Seven mortgage servicers did not provide any information about forbearance extension.
Additionally, some of the information on the websites was out of date. Several mortgage servicers never updated their websites to reflect the programs under the CARES Act.
Several mortgage servicers stated on their websites that borrowers would have to pay back all of their missed payments at once.
FHA-OIG Sets The Record Straight On Coronavirus Mortgage Forbearance
FHA-OIG says borrowers are not required to pay back their missed payments in one full payment.
FHA says mortgage servicers are required to offer borrowers a “COVID-19 Standalone Partial Claim,”
This program allows borrowers an interest-free subordinate mortgage. The interest-free subordinate mortgage does not have to pay off until their first mortgage is paid off. The FHA-OIG report also added:
Lack of clear and consistent guidance from FHA servicers and enforcement by FHA of that guidance allows servicers to leave struggling homeowners unable to make informed decisions about paying their mortgages and relief that may be available to them during this pandemic.