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What to do if you can’t afford to pay your mortgage right now

With more than 30 million Americans losing jobs or businesses and others forced to take pay cuts, making monthly rent and mortgage payments has become increasingly difficult. Viewers share their challenges, and John Yang talks to the National Consumer Law Center’s Diane Thompson, formerly of the Consumer Financial Protection bureau, about what regulators and lenders are doing to try to help.

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  • Judy Woodruff:

    With more than 30 million Americans losing their job or business, and millions of others forced to take pay cuts, many homeowners and renters are finding it increasingly difficult to make their monthly housing payments.

    Given the job losses and tomorrow's monthly payment deadlines, we spoke with some of you about the challenges you are facing.

    Here's a sampling of what we heard.

  • Brenton Mattox:

    My name is Brenton Mattox. I currently live in Philadelphia, Pennsylvania.

  • Evanna Bacon:

    My name is Evanna Bacon. And I'm from Tupelo, Mississippi.

  • Christopher Land:

    My name is Christopher Land. I live in Taylor, Michigan.

  • Candace:

    Hi. My name is Candace. I am 28 years old.

    So, I just bought a house prior to being laid off. And it's been difficult because there haven't been a lot of relief efforts that I have been able to take advantage of. So, I'm just, you know, trying to make payments on time. And wherever — however that comes, whether it's through freelance projects or just from savings, that's really how I'm coping with being laid off at the same time as owning a home.

  • Christopher Land:

    Our mortgager, they immediately were like, yes, we're just doing a flat 90-day forbearance. So they just tacked the next three months onto the back end of our mortgage. If they hadn't done that, we'd be in much, much worse shape.

  • Brenton Mattox:

    My landlord was very accommodating. I had always kept an open dialogue with him about when I could pay something, when I was expecting to pay something. He sympathized with that and was able to accommodate me accordingly.

    I can't — honestly, I can't imagine what I would do in this situation if he wasn't flexible.

  • Evanna Bacon:

    This month, I'm also going to have to ask our landlords to cut our rent in half. It's kind of one of those situations where, if they say no, then OK. We will scrape it together and, I will have to use, you know, part of my check from the government, which I was hoping to make sure that we have food with that.

    There's no — absolutely no buffer in our income.

  • Candace:

    Because I have this mortgage note, I'm just hoping that employment prospects just pick up for me in the next few weeks, because I would love to be able to not have to worry as much on a day-to-day basis about providing for necessities and also just carrying on with regular life.

  • Christopher Land:

    If we had not gotten that mortgage forbearance, it would be — you know, it would be time to start looking at potentially going to — not yet, but we would we would be in range of talking about, like, where do we find different food banks. You know, what is that going to look like?

    Not paying for a mortgage for three months is the difference between life and death. It's unimaginably — it's unimaginably huge.

  • Judy Woodruff:

    John Yang explores now what kind of relief and options might be available for people who are struggling to make their mortgage payments.

  • John Yang:

    Judy, just as strapped homeowners are scrambling for solutions, so are lenders.

    Diane Thompson oversaw mortgage regulations at the Consumer Financial Protection Bureau. She now works with the National Consumer Law Center, which is a nonprofit focusing on consumer issues for low-income people.

    Diane Thompson, thanks for joining us.

    I know there's no-one-size-fits all answer to the people, the concerns we just heard. But — so, let's try for the size that fits most.

    I know that 70 percent of the mortgages in America are backed by the federal government one way or another, federally backed one way or another. If I hold one of those mortgages and I lose my job, what should I know?

  • Diane Thompson:

    The immediate thing to do if you are in that situation is to call or contact, e-mail your mortgage servicer.

    Under federal law, for homeowners that are suffering any kind of financial hardship related to COVID-19, they can get up to 12 months of forbearance. So they — 12 months where they don't have to make the mortgage payment.

    In most of those cases, what should happen with the mortgage payment is, it will just get put on the back end of the mortgage.

  • John Yang:

    You say 12 months. We heard one of the gentlemen in the tape just say that his lender gave him three months automatically.

    Can he go back and ask for more?

  • Diane Thompson:

    Yes, that's exactly right.

    Many lenders, we're hearing, are giving people three months automatically. But under the CARES Act, you have a right to ask for up to 12 months, if you need it.

  • John Yang:

    And we have heard he was getting that time, the three months tacked on to the end of the life of his mortgage.

    We have heard some people say that their lenders tell them that they will get 90 days' forbearance, but, at the end of the 90 days, they are going to have a balloon payment of the three months that they missed. What should the people say if their lender tells them that?

  • Diane Thompson:

    Well, in the vast majority of the cases, people will not have to pay a lump sum.

    All of the federal regulators have been working on making clear that most homeowners will get the payments moved to the back of their loan. They will not have to pay a lump sum. There has been an awful lot of misinformation out there, which many of the federal regulators are working now to correct.

    If people — people should go ahead and accept the forbearance. If they get to the end of the forbearance period and the lender then says, now you have to pay me this back in a lump sum, they should contact a housing counselor. They should see if they're eligible for free legal services.

    They should complain to the Financial Protection Bureau, and they should complain to their state attorney general.

  • John Yang:

    And what are — are there other kinds of help or forbearance that homeowners could be asking for right now?

  • Diane Thompson:


    All lenders have a whole suite of assistance options, opportunities for people who are having trouble making their mortgage payments for one reason or another. If you want something different than the regular forbearance, you know that your income has been permanently reduced now, you should just call up your mortgage company or, again, contact them by e-mail and say, I need help, I need to pursue some kind of loss mitigation.

    And they can work with you to figure out, what's the option that best fits your circumstance, anything from a short-term repayment plan, to a loan modification that will permanently lower your payments on your mortgage.

  • John Yang:

    Everybody's taking a hit in this, including the lenders.

    Is there a threat to the housing market and the home mortgage system and the home mortgage industry?

  • Diane Thompson:

    I think there is a pretty significant risk here.

    We are already at 7 percent of — roughly, of all mortgages in the country in forbearance. Those numbers are going up every week. We expect to see a large surge in the next week, when we get to the May 1 payment date.

    That's a significant fraction of the mortgage system. And we're going to need concerted, effective leadership at the federal level to prevent another major housing crisis, like we saw in 2007 and 2008.

    One immediate risk is that the lenders have to keep advancing the payments on the mortgages. Even though the homeowners aren't making them, the lenders have to keep advancing those payments to the ultimate investors in the mortgages, and for at least four months.

    And if they — if that goes on, and we keep seeing these increasing numbers of forbearances, there's a real question about when the mortgage companies will start to run out of cash.

    At that point, we could start to see bankruptcies. That could be devastating for homeowners, as their mortgages get transferred from one company to another, and loan records get lost. And we could, at that point, see a pretty significant uptick in unnecessary foreclosures.

  • John Yang:

    Diane Thompson of the National Consumer Law Center, thank you very much.

  • Diane Thompson:

    Thanks, John.

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