#What will credit reports show after COVID19 Forbearance?

Great Article by Kathleen Howley. Mortgage Forbearance is a necessity at this time for millions of American's. Under the CARES Act the Mortgage Servicer's are reporting the credit as current if the homeowner was current prior to starting the Forbearance but CARES Act now needs to address the notated sections of a credit report where it could show "Forbearance". Read below....

Forbearance becomes a ‘Scarlet Letter’ on credit reports

A 'comments section' workaround consumers aren’t being told about

May 12, 2020, 3:22 pm By Kathleen Howley

Mortgages in forbearance as a result of COVID-19 have to be reported as “current” on credit reports.

That’s the law, as laid out in Section 4021 of the CARES Act passed by Congress at the end of March. It says servicers “shall report the credit obligation or account as current.”

But, it turns out there’s a workaround that can make it difficult for people with mortgages in forbearance to get another home loan after the COVID-19 crisis is over – for as long as a year after the forbearance period ends. That can impact their ability to refinance or buy a home when times are better.

The CARES Act doesn’t mention the comments section of credit reports, and that’s where forbearance notations are going.

Any reference to forbearance on a credit report, including in the comments section, can be a “scarlet letter” for an applicant hoping to get a new mortgage, said David Stevens, the former head of the Mortgage Bankers Association who is now CEO of Mountain Lake Consulting.

“I think the intent of lawmakers is that forbearance would not harm your credit, when in fact that label may do just that,” Stevens said. “I don’t believe consumers are aware they have this scarlet letter being reported on their mortgage.”

The way credit bureaus such as Experian, TransUnion, Equifax are reporting forbearance does show the mortgages as current, according to documents reviewed by Housing Wire. In the section that lists how many times a mortgage had late payments, broken out by 30 days to 59 days, 60 days to 89 days, and “90+” days, the documents show all zeros.

That means: No late payments. The loan is, technically, current. The credit bureaus are following the letter of the law.

What some lawmakers may have overlooked, when passing the CARES Act, is that pesky comments section.

Source: Housing wire

#hardshipresource #ican'tpaymyhomeloan #Ican'tpaymymortgage #mortgageassitance #gethelpnow #creditassistance

2 views0 comments

Recent Posts

See All

Mortgage Relief Options and Protections

Relief for all federally or GSE-backed mortgages Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and guidance from federal agencies and the GSEs, there are two protections for ho

Early Impact on Credit

Great Blog post from the Consumer Financial Protection Bureau on the Impact to Consumer Credit FOR IMMEDIATE RELEASE: August 31, 2020 MEDIA CONTACT: Office of Communications Tel: (202) 435-7170 CONSUM

© 2020 by Hardship Resource. The Cofini Group LLC- 1-833-8-COFINI

Get Social

  • Grey Facebook Icon
  • Grey LinkedIn Icon
  • Grey YouTube Icon



The information provided by The Cofini Group LLC (“we,” “us” or “our”) on http://www.hardshipresource(the “Site”) is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site. UNDER NO CIRCUMSTANCE SHALL WE HAVE ANY LIABILITY TO YOU FOR ANY LOSS OR DAMAGE OF ANY KIND INCURRED AS A RESULT OF THE USE OF THE SITE OR RELIANCE ON ANY INFORMATION PROVIDED ON THE SITE. YOUR USE OF THE SITE AND YOUR RELIANCE ON ANY INFORMATION ON THE SITE IS SOLELY AT YOUR OWN RISK.




The Site may contain (or you may be sent through the Site) links to other websites or content belonging to or originating from third parties or links to websites and features in banners or other advertising. Such external links are not investigated, monitored, or checked for accuracy, adequacy, validity, reliability, availability or completeness by us. WE DO NOT WARRANT, ENDORSE, GUARANTEE, OR ASSUME RESPONSIBILITY FOR THE ACCURACY OR RELIABILITY OF ANY INFORMATION OFFERED BY THIRD-PARTY WEBSITES LINKED THROUGH THE SITE OR ANY WEBSITE OR FEATURE LINKED IN ANY BANNER OR OTHER ADVERTISING. WE WILL NOT BE A PARTY TO OR IN ANY WAY BE RESPONSIBLE FOR MONITORING ANY TRANSACTION BETWEEN YOU AND THIRD-PARTY PROVIDERS OF PRODUCTS OR SERVICES.




The Site cannot and does not contain financial literacy advice. The financial literacy information is provided for general informational and educational purposes only and is not a substitute for professional advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals. We do not provide any kind of financial literacy advice. THE USE OR RELIANCE OF ANY INFORMATION CONTAINED ON THIS SITE IS SOLELY AT YOUR OWN RISK.




The Site may contain links to affiliate websites, and we receive an affiliate commission for any purchases made by you on the affiliate website using such links.