forebearance/deferral/good or bad?

[Eva Mackowski]

Good Morning fellow BPers.. I hope everyone is doing well.  I have some questions on whether to sign up for a forbearance or deferral program with our mortgage on our home and 2 STR's..    We have 2 STR's that have been heavily hit by COVID, and we've talked to our mortgage company for both, including our primary.  Thinking of moving forward with a 90 day hold on mortgage to save some cash in case we need it.. We do have a little cushion that will get us through, but I'm not sure what the long term effects will be on our STR business down the road.. We may need our cushion once all the stimulus, SBA's, forebearance/deferral programs are gone..  Anyone have any experience with this?  There are 2 things that bother me when dealing with the big banks, and that is they don't seem to know what the expectation is to repay the suspended payments, ie, are they going to want a lump sum at the end, are they going to want to charge crazy high interest rates, etc... and they are promising that no derogatory credit/statements will be made on our credit.  I want to see what others thoughts are on this issue, and if you have experience with this, what happened to your credit?

Thank you so much.. There is much experience in this group, and I'm struggling with whether to trust the mortgage company and hope they are really trying to help.

[Patricia Steiner]

I'm a former wealth banker so I'll respond from that perspective.  A forbearance does not negatively impact your credit.  Most lenders at this time are adding the payments to the back of the loan but you'll need to go online to each mortgage company to find out what their program provides.  I've had a few clients who have already arranged to suspend their mortgage payments for three months and the process was automated, easy, and quick. 

Again, each lender will have its own program so go online and check it out.  I think it's a great opportunity for landlords who may have their cash flow interrupted by tenant payment hardships.  It's not business as normal so shore up your options now.