In the News

Since the COVID-19 emergency began DannLaw has issued regular updates featuring important information and advice for homeowners struggling to make their mortgage payments because they have lost jobs or been laid-off as a result of the crisis. As we’ve noted numerous times people with federally-backed loans are eligible for various types of relief under the CARES Act including a prohibition on foreclosures, an automatic 90-day payment suspension, and up to one year of forbearance.

If used correctly, the assistance provided by the Act can be a real lifesaver for families facing financial disaster.

Unless something goes wrong. And as we’ve learned over the years, in situations involving banks and mortgage servicers something ALWAYS goes wrong.

In this case, banks and servicers have been placing homeowners into forbearance by mistake. According to a CNBC report, borrowers who called servicers seeking information about forbearance and other relief programs were put into forbearance without their consent by swamped call center workers. It will come as no surprise that Wells Fargo, perennial winner of the worst bank in the world award, is among the offending lenders.

One borrower quoted in the story said he contacted Wells in early March because he was concerned that his wife, a teacher, might no longer be paid. “I was asking to be educated on what my options were. Someone put me in this[forbearance] and never told me what it was. No one ever used the term forbearance…”

His spouse didn’t lose her job so they could continue to make their house payment. Only problem: because they had been placed in forbearance Wells couldn’t accept it. After making multiple calls the borrower was told the situation was resolved and his loan was “fine.” Wells blamed the SNAFU on a “website problem.”

Anyone familiar with Wells will immediately know two things: there was no website problem and the loan was not fine—something the borrower learned when he tried to take advantage of historically low-interest rates by refinancing his home. His mortgage broker told him he couldn’t do it because his mortgage—the one that was “fine”—was in forbearance. The poor guy is still trying to get Wells to correct the mistake.

So here are some important takeaways from a story that would be unbelievable if it didn’t involve banks and mortgage servicers:

First, never communicate with a bank or servicer over the phone. Always do so in writing, preferably by certified letter. It may be inconvenient and time-consuming, but in the end you’ll have a written record of what the bank said or promised and what you said or promised. That information will prove to be extremely valuable if you’re engaged in a serious dispute with a lender.

Second, contact us at 877-475-8100 or [email protected] to arrange a free consultation if you’re confused or unsure about whether you should take advantage of forbearance or other forms of relief offered via the CARES Act or a private lender. We’re here to help you avoid mistakes that could impact your finances for years to come.

Third, contact us right away if you’re having a problem or dispute with a bank or servicer and they refuse to respond to you or correct it. The lender may be violating federal and/or state consumer protection laws, which means you may be entitled to financial compensation.

Fourth, remember, forbearance is NOT forgiveness. You will eventually have to make the payments that you are delaying. You must understand how much you will be expected to pay when the forbearance period ends.

Fifth, make your house payment if you can. Doing so will protect any equity you have in your home and make it possible for you to refinance at a lower interest rate. You won’t be able to do that if you place your loan in forbearance.

Sixth, if you don’t follow our advice make sure to write down our phone number. You’re probably going to need it at some point in the not-to-distant future.

Finally, be well, stay safe, and remember we’re here to provide advice and guidance during this troubling and confusing time.

Join DannLaw founder Marc Dann as he discusses the problems plaguing the Paycheck Protection Program, when and how to access information about mortgage forbearance and other relief programs, and the Trump Administration’s perversion of the CFPB.

If you need help or advice please call 877-475-8100 or email [email protected] to schedule a no-cost consultation

https://www.facebook.com/fightforconsumers/videos/2491221337874893/

As we’ve mentioned in a couple of our COVID-19 updates, under the CARES Act renters who live in “covered properties” as defined by the law may not be evicted for non-payment of rent for 120 days retroactive to March 27, 2020. Landlords are also prohibited from imposing fees, penalties, or other charges for non-payment of rent during the moratorium period and they must provide tenants with a 30-day notice of their intent to evict when the moratorium ends.

We’re glad this protection exists, but the advice we give to homeowners applies to tenants: take advantage of the relief if you need to, but it’s a good idea to pay your rent if you can in order to avoid having to make a huge payment when the moratorium ends.

What is a covered property?

Good question. The moratorium applies to most federally assisted rental housing programs administered by the Department of Housing and Urban Development, the Department of Agriculture, and the Department of Treasury including:

Public housing

Section 8 Housing Choice Voucher program

Section 8 project-based housing

Section 202 Supportive Housing for the Elderly program

Section 811 Supportive Housing for Persons with Disabilities program

Section 236 multifamily rental housing

Section 221(d)(3) Below Market Interest Rate housing

HOME

Housing Opportunities for Persons with AIDS

Section 515 Rural Rental Housing program

Sections 514 and 516 Farm Labor Housing program

Section 533 Housing Preservation Grants

Section 538 multifamily rental housing

Low-Income Housing Tax Credit

The eviction moratorium applies to tenants whose owners mortgages are backed by Fannie Mae or Freddie Mac. That is great news, but finding out if you live in building that falls under this definition was a real challenge.

Until today. That’s when Fannie Mae and Freddie Mac launched websites that make it easier for renters to find out if they live in a covered property. You may access the Freddie Mac site here: https://myhome.freddiemac.com/renting/lookup.html?utm_medium=email&utm_source=govdelivery

You may access the Fannie Mae site here: https://www.knowyouroptions.com/rentersresourcefinder?utm_medium=email&utm_source=govdelivery

In addition, both Freddie and Fannie have set up hotlines for tenants who have questions or need support. You can call Fannie at 877-542-9723. You can reach Freddie at 800-404-3097.

And if you still have questions and can’t get the answers or help you need contact DannLaw by emailing [email protected] or calling 877-475-8100 to schedule a no-cost consultation. We’ll be here to help throughout the COVID-19 crisis.

If there is one thing homeowners, consumers, and small business owners need from the federal government, their banks and mortgage servicers as they attempt to make sound financial decisions in the midst of the coronavirus crisis is reliable information.

Of course, that’s exactly what they’re not getting.

So in this ninth edition of DannLaw’s Covid-19 updates I’ll try once again to fill the knowledge gap and clear the confusion surrounding the multiple aid packages that have been enacted by Congress and the Trump Administration. Don’t be surprised if I revisit some topics we’ve addressed in the past because, and I’m sure this won’t come as a shock, many of the problems that have made it difficult for Americans to access the help they deserve and desperately need still haven’t been fixed.

Let’s start with what is quickly becoming a textbook example of a good idea gone bad: the Paycheck Protection Program (PPP). If you had the time and/or the inclination you could spend days watching and reading media stories detailing the botched rollout of the PPP. As we noted in an earlier update, the bankers responsible for accepting and submitting loan applications to the SBA favored existing clients over non-clients and bigger borrowers over small ones because bigger loans generate—wait for it—bigger fees for the banks.

This left many smaller and/or minority owned businesses standing on the sidelines as bigger companies quickly sucked up the $350 billion in available aid. Among those doing the sucking were well-capitalized firms and entities including Ruth’s Chris Steakhouse, Harvard University, the Los Angeles Lakers, Shake Shack, and Nathan’s Famous Hot Dogs.

A reasonable person might believe that the feds would address the problems afflicting the program before beginning to hand out the additional $350 billion in PPP funding appropriated by Congress at the end of April.

A reasonable person would be wrong.

Today, the government is still unable to provide definitive, reliable information that will enable business owners to determine if they should even bother applying for assistance. We still don’t know who is entitled to participate in the program, what the terms of promised forgiveness will be when the time comes to pay the money back, or if all borrowers regardless of size will be treated fairly.

As if all that weren’t confusing enough, the IRS just threw a new stick in the works by ruling that small business owners whose loans are forgiven can’t take tax deductions for associated wages and other expenses.

The Wall Street Journal notes that without the deductions, the program will help companies survive but it becomes a wash from a tax perspective, limiting its potential value. Employers will get tax-free income if their loans are forgiven but lose the associated deductions.

Senator Chuck Grassley, one of the authors of the PPP program said he was disappointed by the IRS ruling. “The intent was to maximize small businesses’ ability to maintain liquidity, retain their employees and recover from this health crisis as quickly as possible. This notice is contrary to that intent,” he  said.

But the IRS doesn’t give a damn about Congress’ intent. That means the House and Senate must vote to overturn the IRS directive. I’m not holding my breath.

What I am doing is talking to lots of frustrated and bewildered business owners who kept employees on their payroll because they believed the PPP would compensate them for doing so. Now it appears many of them may be left on the hook for the costs—costs they could ill afford and would not have incurred if they hadn’t been enticed by what appear to be empty promises.

We’re continuing to investigate claims and search for ways to hold the banks that played favorites during the application process accountable for their actions. If you have faced any of the issues I’ve described or believe you have been discriminated against, please feel free to share your experience with me by emailing [email protected].

Unfortunately, things are also clear as mud for homeowners searching for information about programs that may help them save their homes as the Covid-caused recession deepens. A reasonable person would begin such a search by visiting their mortgage company’s website.

Like the reasonable person who thought the government would fix the PPP, this reasonable person would be dead wrong.

How do I know?

Because the Office of the Inspector General of the United States Department of Housing and Urban Development said so in a recent report:

“Our review of the 30 servicers’ websites, which service approximately 90 percent of FHA loans, revealed that those websites provided incomplete, inconsistent, dated, and unclear guidance to borrowers related to their forbearance options under the CARES Act.” Wells Fargo, Nationstar, PHH/Ocwen, Rushmore, Fay Bayview, M&T, and Lakeview were among the companies singled out for criticism in the report which you can read  here.

This lack of clarity is especially aggravating because the FHA is offering real help for borrowers. Anyone with an FHA loan is entitled to a 60-day suspension of payments, followed by another 120 days of forbearance that can then be extended for  180 days. At the end of the forbearance period the actual amount of payments owed will be added to the back of loans at zero interest in what is called a “partial claim” silent second mortgage.  Hopefully, scrutiny from the FHA will motivate servicers to make accurate information  about forbearance more accessible to the millions of people who need it.

People who have non-FHA-insured mortgages are having an even more difficult time obtaining accurate information about their loans. That’s why we have prepared a simple Request For Information (ROI) letter you can send to your mortgage lender that will help you determine who owns and insures your loan and what relief programs your lender/servicer may be offering.

You can download the letter from our website  here. Address it to the RFI/NOE QWR Address and if you can, send it by certified mail so you can prove later that the servicer received it. If you want our help in reviewing the information you receive (or preparing the initial letter)  please schedule a no-cost video or phone conference by emailing [email protected].

Once you know all you need to know about your loan, here are important factors you should take into consideration before seeking relief:

1. Forbearance is not Forgiveness. As a recent article in the Wall Street Journal makes clear, you will eventually have to pay the amount you owe—and lenders can demand that you pay it all at once at the end of the forbearance period.
2. Make your mortgage payment if you can afford to do so.
3. Understand how much your house is worth. If you have equity in your home, you should protect it.
4. Always communicate with lenders/servicers in writing so you will be able to prove what the lender promised you and what you promised them.
5. If you believe you are in over your head or are feeling pressured by a lender or servicer, please contact us or another lawyer. We are here to answer your questions and offer advice that could save your home and secure your financial future.

To add insult to injury, I’m compelled to note that the Trump Administration is using the pandemic to pervert and subvert  the mission of the Consumer Financial Protection Bureau (CFPB). The New York Times   just reported that leaders manipulated the Bureau’s research process so they could justify creating a new rule favorable to the predatory payday lending industry. This revelation was closely followed by news that the CFPB was using the pandemic as an excuse to roll back protections for home buyers. The leaders of the National Association of Consumer Attorneys, including DannLaw’s Brian Flick, called out the CFPB in this letter .  Here is part of what they said:

“Debt collectors, notorious for their aggressive and abusive conduct, should be closely monitored (and credit) bureaus and furnishers should be made to comply with the Fair Credit Reporting Act at all times. Lenders should be strongly discouraged from making costly, high-interest loans (and the) CFPB should work with all mortgage and student loan servicers to employ practices that would help borrowers stay in their homes or avoid default.”

Finally, I want to assure everyone that DannLaw’s attorneys and paralegals have been and will continue to be available to you during the crisis. We are prepared to use every tool in our arsenal to protect homeowners, consumers and small businesses from abuse by mortgage lenders, creditors and other predators.

If you’ve lost your job, suffered a reduction in income or need guidance about how to keep a roof over your family’s head we acall or email away.

Thanks for reading the update. Be well, stay safe, and remember, we’re all in this together.