Dough Roller spoke to Sean Coffey, who helped hundreds of homeowners during the mortgage foreclosure crisis. If you’ve lost your income or seen your wages cut, he has some tips to minimize common monthly expenses and advice on how to keep your house.
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If you have a monthly budget, evaluate what is the nice-to-have’s versus the necessities. Cut back where you can. For areas that you can’t eliminate, Coffey lists some tricks to minimizing those expenses.
For things like cable and internet, Coffey says these prices tend to be negotiable.
Coffey got his internet package on a promotion. After the promotion ended, he noticed the bill jumped from $39.99 to $94. He called his internet provider, who wasn’t much help. While he was on the phone, he took screenshots to show how long he waited to talk to a real person. When the call center couldn’t help, he took to Twitter, posting those screenshots. Even though he didn’t have many followers (less than 100), he was able to lower his bill to $29.99/month. He suggests calling every 12 months or so to get a new promotion.
For car owners, insurance can be another big expense. If you don’t drive much, or if COVID-19 has you home-bound, call your provider and ask if they can lower your rates based on your mileage. Some car insurance providers track mileage usage and only charge based on how frequently you drive, but you may not even need to switch providers to get this benefit.
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If you are still driving the same amount but need to squeeze some extra money from somewhere, Coffey says you can look at increasing your deductibles temporarily to lower the monthly premiums. This can be a risky option though and you’ll need to be prepared to pay more if you get into a crash.
If you’re facing high medical bills because of COVID-19 (or any other reason), start by examining those bills closely. It’s likely they include an error. You can also call your insurance company to negotiate your payment (ask if you can pay the rate a Medicare patient would have been charged).
Avoiding Foreclosure on Your Home
Banks across the country are taking action to stem the tide of possible foreclosures. Here are some ways banks are offering to help–all of these depend on you proactively contacting your bank before you miss a payment.
- Bank of America customers can request a payment deferral. Payments will be added to the end of the loan. BOA will not report this to the credit bureaus.
- Wells Fargo’s eligible customers can take advantage of a three month payment suspension. You’ll need to log onto Wells Fargo banking system and email them through their message center. Within 7-10 days, you should receive snail mail outlining the next steps.
- Chase customers having trouble should contact them at 1-800-848-9380 or log into their system to send a secure message.
- Citi has hardship programs through its service provider, Cenlar FSB. Contact them at 1-855-839-6253.
- US Bank is offering a payment forbearance up to 90 days with no late fees.
- PNC is offering customers up to 90 days postponement with no late fees.
If you are worried about not being able to pay your mortgage, Coffey suggests calling your servicer–this is who you send your checks/direct deposits to each month. The earlier you start the process, the more options you’ll have. Waiting until the first or second payment is missed can trigger action by the bank. If the bank isn’t helpful or you want someone with a bit more expertise, find a local housing counselor to work with. Use one of the U.S. Housing and Urban Development’s (HUD) approved counseling agencies (also check out HUD’s COVID-19 Resources and Fact Sheets).
If you have credit card debt and are worried about making your mortgage payment, Coffey says to pay your mortgage first. Not paying off credit cards comes with its own problems (including a falling credit score), but banks won’t take your home away because of them. Prioritize your mortgage.
If your loan is through Fannie Mae or Freddie Mac and you’ve lost income because of COVID-19, you are eligible to pay less each month or pause payments all together. NPR quotes Mark Calabria, the director of the Federal Housing Finance Agency (that oversees both Fannie and Freddie) as saying: “That forbearance is up to 12 months, depending on their particular situation.” This move should cover about half of all mortgages, but homeowners cannot simply stop paying their loans back. Coffey’s advice holds here too–borrowers need to call their servicer. This program has the added benefit that both Fannie and Freddie have instructed lenders not to report any missed payments–ensuring that just because you are suffering from a loss of income from COVID-19, your credit score won’t drop.
You’ll also want to monitor the local news to understand what your state has done to stem foreclosures. In California, Governor Gavin Newsom struck a deal with four of the country’s five large banks (JP Morgan Chase, Citi, US Bank, Wells Fargo, some state banks, and credit unions) to suspend foreclosures and delay mortgage payments to residents who can provide evidence they’ve been impacted by COVID-19. These programs are meant to provide relief and buy homeowners time. Just make sure that you fully understand them before taking advantage of it (for example, not all banks may participate). And again, call your bank before your monthly payment is due.
If you feel you’ve done everything right–you’ve spoken with your bank, you’ve worked with a local housing counselor, you’ve run through every program available to you, and you are still having trouble, Coffey suggests two actions. First, file a complaint with the Consumer Financial Protection Bureau. Second, go to the media. This strategy requires that you be willing to go public with your story, so you’ll want to think through what that means for your family.
Start by scouring the local papers to see which reporters write about these topics. Find a reporter who has knowledge about local policies and banks and reach out to them. Coffey suggests referencing an article they’ve written and briefly (in 2-3 sentences max) explain your situation (summarize what steps you’ve taken, explain why you are in a financial bind, and let them know you are interested in telling your story). Email each reporter individually, starting with the reporter you think will be most interested.
If you’ve done everything right but the money is not there, no government program can help, and foreclosure looks inevitable, Coffey suggests researching how the process works in your state (New York has a simple flow chart that lays out their process). In some states, the process takes at least six months. Understanding where you are in the process and what will trigger the bank to take more aggressive actions can help you avoid the worst outcome (or plan an exit strategy that is most financially beneficial to you). If you need help with this, look for local non-profits.
If the bank starts the foreclosure process, it becomes part of the public record. Scam artists search these listings and try to take advantage of vulnerable people. If someone contacts you to help you modify your mortgage, Coffey warns to steer clear. You can identify scam artists by those who are promising something that sounds too good to be true. Only the loan servicer can modify your loan, not someone acting on your behalf. If someone tells you otherwise, they are lying. In many states, it’s illegal for companies to charge for their services upfront–so watch out for that too.
Coffey says he’s never seen it work out for a homeowner to pay someone to help them when they are struggling with their payments; inevitably homeowners will pay thousands of dollars to a third party while getting themselves that much closer to foreclosure. If you are having trouble with your mortgage, Coffey suggests going to a non-profit housing counselor that is HUD approved. These groups tend to have relationships with loan providers and can give you an accurate read on what’s happening (for example, they may be able to tell you when it’s normal that the bank has gotten back to you and when it isn’t).
The bottom line–tighten your budget if that will help. If not, tighten where you can and contact your mortgage servicer to see what programs they have to help.