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27 Mar

Mortgage deferrals and other financial relief you may not be aware of

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Posted by: Aneta Zimnicki

Mortgage deferrals are on the table.  But don’t assume guaranteed automatic approval.  Details depend on lender. See DLC COVID-19 page for contact info.  Have patience, lender phone lines are jammed.  Some lenders offering email request forms to streamline. Some lenders loosening up requests to extend to deferral on rental property as well. For the most part, some explanation of your income and financial hardship is needed. 

As you can expect,  a deferral is not consequence free, it will cost you interest, and also stick you with possible higher future payments, but it does offer immediate relief.  Renters should understand this is not a free pass to skip on rents, much hot debate in this arena.  Also, it is noted within the industry, that if you truly don’t need deferral, consider not filing this request, it will help keep our financial systems more stable and leave room for folks who truly need help with the deferrals.

Get everything in writing when you request your mortgage deferral.  Get the customer service rep confirmation number. It is promised that this should not affect your credit, however, mistakes can happen.  A mortgage missed payment is a very serious mark on your credit. Prepare yourself upfront by setting up credit monitoring at Equifax (the most popular report with lenders) and at Transunion  The ongoing monitoring service is not free, but is critical if issues arise.  There is a free option by snail mail (does not include your score), available to you once per year.  Note that there is a lag in reporting, so it may take a month or so before credit is reported to the credit reporting agency.

At the time of this writing, looks like Equifax is stepping up and offering their one time report, with score included (usually about $25), for free.  Transunion has a free once per month disclosure report (will not include score). Make sure you don’t navigate out of the webpage once they display report…you will burn your monthly freebie (their interface is tricky and annoying)

There are other ‘free credit reporting’ services out there, I cannot confidently comment on their validity or comprehensiveness.  Mortgage lenders use direct Equifax and Transunion, and the algorithms for the scoring is specific to that purpose.  You may see a different score on the consumer end, albeit it should give generally a good idea.  Lenders do use score as a guideline, but they look at each trade line item as well, that is why opening a full report and checking for mortgage delinquency items is important.

Some mortgage payments include property tax.  Make sure a missed payment or deferral in one doesn’t trigger non-payment in the other, especially the mortgage! I have seen some mistakes before on client files, triggering mortgage non-payment reporting.  I always recommend keeping mortgage and property tax payments separate for several reasons, despite the inconvenience to some borrowers.

Consider using your existing secured line of credit in combination, or in lieu of, mortgage deferral.  It may be a cheaper interest option.  As a proactive measure, consider getting secured lines of credit.  Or explore a refinance. Contact me to explore the options.

Take advantage of the various other deferral programs.  Many cities offering property tax deferral, utility deferral.  There may be some condo fee deferrals as well.

There may be some relief with your credit cards and unsecured loans, try contacting them to see if they can help.  I wouldn’t be surprised if there is some government announcement about help on this matter in the future .