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MORTGAGE FORBEARANCE AND YOUR CREDIT REPORT UNDER COVID-19

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

We have been getting a lot of questions about the Forbearance program under Covid-19, and more than one question about credit reporting apparently picking up on the granted forbearance, resulting in supposedly a negative impact on the borrower.

Unfortunately, not all the facts behind these questions is known, but there are definitive guidelines required by legislated regulations.

On the credit reporting issue - the rule is simple:  IF YOU GET A COVID-19 FORBEARANCE AND AT THE TIME YOU GET THE FORBEARANCE YOU ARE NOT CURRENT ON YOUR MORTGAGE, YOU WILL CONTINUE TO SHOW UP AS A LATE PAYMENT STATUS ON YOUR CREDIT REPORT.

The CFPB has issued a statement on the CARES Act dealing with this and other credit relating questions on their website, but here is the crux of what it says on credit reporting:

Credit reporting under the CARES Act

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act places special requirements on companies that report your payment information to credit reporting companies. These requirements apply if you are affected by the coronavirus disease pandemic and if your creditor makes an agreement (called an “accommodation” in the Act) with you to defer a payment, make partial payments, forbear a delinquency, modify a loan, or other relief.

How your creditors report your account to credit reporting companies under the CARES Act depends on whether you are current or already delinquent when this agreement is made.

  •   If your account is current and you make an agreement to make a partial payment, skip a payment, or other accommodation, then the creditor is to report to credit reporting companies that you are current on your loan or account. This applies only if you are meeting the terms of the agreement.
  •   If your account is already delinquent and you make an agreement, then your account will maintain that status during the agreement until you bring the account current.
  •   If your account is already delinquent and you make an agreement, and you bring your account current, the creditor must report that you are current on your loan or account.

This CARES Act requirement applies only to agreements made between January 31, 2020 and the later of either:

  •   120 days after March 27, 2020 or
  •   120 days after the national emergency concerning COVID–19 ends.
  • ______________________

Copyright 2020 Richard P. Zaretsky

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., ZARETSKY LAW GROUP. ATTORNEYS AT LAW, 1615 FORUM PLACE, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660.  RPZ@ZARETSKYLAW.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide www.ZARETSKYLAW.com

Ronald Curtis
Sapphire Associates - West Palm Beach, FL
Negotiating the best price and terms for my Buyers

Hello Richard.....

Thank you for your very instructive post. It is very important to receive information that is factual, current, and most of all, informative.

Best wishes,

RJ

Apr 10, 2020 11:56 AM
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Thanks Ron - stay safe!!!

Apr 10, 2020 12:16 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

As we approach July it will be interesting to see how the skipped pmts. are treated  

Jun 16, 2020 06:28 AM