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hey everyone Kevin here so there's been a lot of talk about this potential mortgage crisis leading to basically a foreclosure crisis after this pandemic ends which is like the last thing we want we're supposed to or a lot of us are here waiting to buy some stocks or whatever for this this v-shape recovery to happen or oh it's going to take a little longer for our stocks to go up and it's gonna be a u-shape well now we're hearing well what if instead of a U or a V it's a w that is we recover and then up foreclosure crisis so a lot of us we hear mortgage crisis more like oh crap what is going on whether or not we own real estate and then there are those of us who own real estate who want to apply for mortgage forbearance that is the right to pause our payments or to freeze our payments so to speak or defer our payments and there are even problems with that so what the heck is going on what is the Fed doing about this they just issued an update on this and what is this going to mean for us let's talk so first of all here's the gist of what's going on when we can't make our payments this is us when we cannot make our payment because our tenant stops paying us or we lost our job and we can't pay that means we cannot send our payment to the person who collects our money known as the loan servicer the loan servicer is somebody who collects our payments and helps redistribute that money to all the people who basically down the line own little mortgage-backed Security bonds it's kind of like you buying Treasury bonds instead of you buying Treasury bonds to invest in and get like a tiny tiny yield on your money you buy mortgage bonds because somebody told you that these mortgage bonds were triple-a rated and no rating agency would ever be incentivized to mislead you on the rating but anyway you buy mortgage bonds because they offer you a tiny little bit of a higher yield and so basically what's happening is when we stop making our payments there are ripple effects gee imagine that not too complicated but you know what the federal government via the stimulus bill to care Zach has said that servicers must work with borrowers and allow them not to make their payment for periods of 180 days and possibly extend that for another 180 days for any kind of federally backed one - for real estate which is most of us now multifamily like five units plus for residential you kind of get 30-day options but I've talked about that ad nauseam in other videos let's now talk about what's actually practically happening and the real problem this means for us last week I made a video talking about what you need to know when you request mortgage forbearance and essentially I've warned that if you don't follow the correct steps of asking for mortgage forbearance you might end up backing yourself into a corner where you end up getting foreclosed on well yesterday NPR did an article on this by interviewing couples who are requesting mortgage forbearance and what NPR found was essentially what I had warned of that if we say hey do you mind if we stop making our payments let's say for 90 days servicer says all right fine but at the end of those 90 days you're gonna owe us those three payments and your fourth payment so you're gonna owe us a total four months on one day well that's insane all that does is set you up for foreclosure and here's literally what the NPR investigation revealed when people were calling their servicers their investigation was conducted on a mortgage company called freedom mortgage and freedom mortgage said that under current federal requirements those amounts that's that's these right here the ones you're not paying are not added to the end of the mortgage but our rather due at the conclusion of the forbearance period aka all of these payments are due on the fourth month which is insane who could possibly afford that especially during a crisis nobody can make four payments all at once so NPR ended up calling the Department of Housing and Urban Development and found out that for FHA and this probably also applies to Fannie and Freddie Mac but they only talked to the FHA Department FHA said FHA never requires a some payment at the end of the forbearance period in other words what a lot of these servicers are doing is basically creating their own rules and so this was really interesting and has a big impact for you especially if you're a homeowner and especially if you need forbearance see the most realistic thing for mortgage forbearances these three payments that you can't make and let's say April May and June are added to the end of your loan so you just have to keep paying your regular monthly payments for an extra three months at the end of your 25 or 30 year or 20 year period whatever's left of your loan that makes sense it's just like having three extra payments like at the end of your car payment or rent payment but you're still living there like that's okay it totally makes sense but tube lump sum pay this is ridiculous and so NPR ended up confronting the mortgage servicer and when NPR confronted the mortgage servicer freedom mortgage NPR said the mortgage servicer said quote we're not saying the payments can't be added to the end of the loan at the termination of the forbearance period freedom mortgage is required to follow the government guidance for bla bla bla bla bla in other words what's basically happening is mortgage servicers are worried and squeezed because they need this money to be able to make the payments they have to make to these investors the people with the mortgage-backed securities and because of that they're basically trying to screw the little guy the mom-and-pop homeowner or the mom-and-pop landlord by tricking people into believing that there are no other options you have to pay back this lump sum right away or get some kind of loan modification or short sale or go into foreclosure if you don't end up making all these bulk payments after you're sort of little grace period that you get well that's ridiculous because it's unreasonable and so the Federal Reserve finally caught wind of this madness make sure to do that I've actually got weeble up on screen right back here and I'll tell you it's been probably my favorite app so far for actually operating trades at ended ours and tracking what the markets doing I have this up on one of the screens like all day long I know there are a bunch of them like this out there trust me I've used like seven or eight different brokers this is not bad well yesterday the Federal Reserve swooped in finally because this is the comfort people need right now to be able to fight the servicers and get their zero dollar mortgage payment that is actually have a forbearance period and and try to have leverage with the banks to get their payment add it to the end of the loan the Fed finally released this which this by the way this release is a sign of what's to come which I'll talk about that and implications in a second but look at this letter here the Federal Reserve released this and they start off the letter by kind of reiterating that the cares Act creates forbearance and that you know this is supposed to protect borrowers from a negative credit reporting you know due to accommodations related to this national emergency they also clarify that financial institutions aka banks and lenders are not expected to designate loans with deferrals due to this crisis as past due and then they kind of just reiterate some protections for consumers but right here is where kind of the threat comes in and then this is the juicy part so it's right here this is great because this is a statement but also a threat the agencies do not expel the agencies by the way are the Federal Reserve and the Consumer Financial Protection Bureau and I think there's one other one the agencies do not expect to take a consumer compliance public enforcement action against the institution aka the government does not expect to have to punish you banks as long as and their words provided that the circumstances were related to the national emergency and that the institution made good-faith efforts to support borrowers and comply with consumer protection requirements as well as responded to any needed corrective action in other words the government and and the Fed because they're not technically part of the government but there's still like a regulatory body the government and the Fed will not punish banks as long as they make a good-faith effort to work with borrowers in other words this bullcrap has to stop because this isn't good faith there's no way any servicer can say I made a good-faith effort to help a borrower by saying yeah just don't make your payments for three months and then pay up four months at the end of that term that's nuts so if you want to request that's $0 mortgage that forbearance period and you need leverage to try to help you get your payment's add it to the end of your loan I highly highly encourage you to make sure you do the following number one reject any option that requires you to make a bulk payment or somehow puts you into a situation where you're not actually going to be able to fulfill those terms the last thing you want is to agree to a some kind of repayment plan only because some representative told you oh well if you end up having problems with that plan just caught us back later no no no don't do that that's gonna put you down crap ville Road like credit damage and and problems and and foreclosure mitigation options all damaging things with high fees no ifs and you're ground up front you've got look and I mean you've got all April because you can't be thirty days late and I mean don't sue me bro if I'm wrong but confirm this generally you can't be thirty days late on your credit until a full thirty days have gone by so you've still got time here to negotiate with these lenders use that time to your advantage negotiate hard with these lenders make sure you get an in writing repayment plan that you can work with most importantly push really hard to have these payments added to the end of your mortgage that is the best option that is actually going to be what gives you real relief your mortgage payment isn't going to go up by doing that with the exception of maybe a little bit for like insurance and property taxes that's okay like if your in pounds are a little bit behind yeah your mortgage payment might go up a little bit to catch up on those but that's not as big of a deal as the actual all mortgage itself so stand your ground if you need to reference that Fed document or that NPR article I will link those down below right under the spot where the two free stocks are for weeble and a free quote for life insurance that takes you like three minutes really fast by the way some people were emailing me and they're like oh my gosh I did not know is that easy to get a quote for life insurance like whoa but seriously stand your ground don't get backed in you have the Fed now backing you up you now have the Federal Reserve in writing saying these mortgage servicers are required to provide a good-faith effort to help you actually be able to get through this period and so you have the right to be on the phone and say I can't do that and it's a recorded line you should be recording the call too by the way when they say hey this is so-and-so on a recorded line cool I'm Kevin I'm on a recorded line too alright let's get into it make sure use the keywords say it in your recording I don't feel like you're providing me with a good faith effort at helping me resolve this period of time where I can't pay my mortgage protect yourself folks very very very important right now in fact if you're a homeowner or a tenant you can go to know your options calm which will give you options for disaster relief as a homeowner or a tenant it'll also go into kind of terms for forbearance and repayment options how they work how to take action frequently ask questions so check that out but this is also a really good first step by the way from the Fed and from consumer regulatory bodies saying hey look the government is going to do whatever they need to do to make sure the little guy doesn't get screwed and that's good that's the comfort we need right now because what's happening is a bunch of baloney the law says we're supposed to be able to enter forbearance and have some kind of reasonable expectation for repaying this the stuff they're trying to pull is not reasonable I get why they're doing it but my hope is that this is just phase one and the Fed comes in and says look take care of the people first and these problems over here let's talk about those next but take care of people first this is really good news for all homeowners tenants any small mom-and-pop investor so hopefully this helps you out thanks so much for watching until next time
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