Mortgage Companies Creating Hurricane Irma Forbearance Default


April 17, 2018

Residents of Pinellas, Hillsborough, and Pasco County and throughout the State of Florida know about the problems created by Hurricane Irma in September, 2017.  Some of the destruction left by Hurricane Irma was visible – fallen trees and broken fences.  But other impacts of the hurricane came by way of hits to the wallet – many Florida Residents lost time at work, and had trouble with making payments on their bills.

FHA Insured mortgages have particular protections to help consumers avoid default and foreclosure as a result of a hurricane. The mortgage companies are required to make accommodations:  The mortgage companies are obligated to give the consumer the option to put their loan in a forbearance, meaning that the borrowers could miss a few payments without a penalty.  Then the mortgage company is required to roll the forbearance into a modification so that the consumer didn’t have to come up with all of the missed payments all at the same time at the end of the forbearance.  During the forbearance, the mortgage company was not to be negatively reporting the agreed-on missed payment on the consumers’ credit report.

All sounds straight forward, right?  Its basically just a technically way to say that folks who where in a hurricane get a break for a could of months after a hurricane, and then go back to making their normal payments.

Unfortunately, we are finding that  the mortgage companies are not all been holding up their obligations exactly the way they are supposed to.  They are making it more difficult to qualify for a modification after the forbearance than what FHA requires resulting in additional “missed” payments due to the delay in finalizing the modification.  These additional “missed” payments are treated by the mortgage company as a “default,” which in turn is creating undue negative credit reporting and impairing the affected consumers’ credit.

Consumers shouldn’t have to be a victim to their mortgage companies’ negligence.  In a situation like this where your mortgage company is improperly preventing you from getting on track with your mortgage payments, impairing your credit, creating a default, and even threatening foreclosure, call us for a no-cost consultation to evaluate your rights – 727-538-4188.

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