Can Unemployment Forbearance Increase Your Mortgage Payment

by AJ from Carpentersville, IL and by Leonor

Ask Kate if unemployment forbearance (UP) increases your mortgage payment: AJ's husband was approved for mortgage forbearance after losing his job. Now with new employment, AJ is worried about having to pay back the 7 months of house payments suspended during the forbearance period. To make matters worse, a balloon payment on their Home Equity Line of Credit (HELOC) is coming up soon.



Continue to the comment section near the end of the page to hear from Leonor. Her 2nd mortgage lender won't admit their attempts to double collect payments from her, simultaneously through loan servicing and a collection agency.

Ask Kate: What Follows Unemployment Forbearance

By AJ from Carpentersville, IL

Will Unemployment Forbearance Increase Mortgage Payment
Kate,

Last summer, I tried getting my first mortgage with Citi modified because I also have a HELOC of $25,000 that is due in full in August to Bank of America - and we've only paid principal.

We were on the verge of falling behind on our first mortgage and wanted to prevent it. Citi denied us due to the fact that we weren't late on our mortgage. Ironically, 2 months later my husband got laid off for the 3rd time in 7 years!

So, we called Citi again and went through the qualification process all over again and were approved for Unemployment Forbearance til June 2016.

But my husband started working one month ago and I am at a loss of what to do. There is no way we can come up with 7 months of mortgage payments and now our HELOC is due in months.

I am thinking we would apply for HAMP, but I don't know how that works with having 2 mortgages.

Any advice on what to do with 2 mortgages after Unemployment Forbearance is over?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Kate's Answer: What Follows Unemployment Forbearance

Hi AJ,

Unemployment forbearance through a current lender reduces or suspends monthly house payments for struggling mortgage borrowers while they search for a new job. Just as HAMP modification and HARP refinance will, this Making Home Affordable program also expires December 31, 2016 (unless it is once again extended.)

Citi, like other lenders, reviews their Unemployment Forbearance program regularly. So while I can't guarantee it, I doubt that Citi is going to require you to fork over a total of 7 house payments immediately upon getting a new job.

Loan Modification After Unemployment Forbearance Ends


However, I could see them increasing your monthly mortgage payment to gradually repay the amount that was in forbearance by tacking a percentage of it onto each reinstated mortgage payment. If you can't afford the higher payment (assuming it increases), you could take it as an opportunity to apply for a HAMP loan modification.

Modifying Your 2nd Mortgage


Then after Citi (hopefully) modifies your 1st mortgage, contact Bank of America about the Making Home Affordable 2MP program that modifies 2nd mortgages.

Where to Turn for More Help


Once last thought. The steps I've given you are like pieces to a puzzle that needs solving. Try not to be overwhelmed. But do take action, one step at a time. I'd encourage you to call a HUD-approved housing counselor whenever you feel you are hitting a brick wall with Citi and Bank of America. Or you might want to call one of these housing experts before you tackle the lenders.

These counselors are free and available 24 hours a day, 7 days a week, including holidays, they say. Try calling during non-peak hours to reduce your wait time.

Best wishes,

Ask Kate
P.S. Making Home Affordable states that as soon as a borrower on unemployment forbearance gets a job, the loan servicer should be notified.

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My Lender Is Attempting to Double Collect 2nd Mortgage Payments
by: Leonor

I need help. Recently divorced, I just qualified for HAMP.

I have a chapter 13 bankruptcy that was dismissed due to divorce. There is a 2nd mortgage for my house. The original company for the 2nd mortgage was Beneficial. They sold it to Lending Tree who sold it to Ditech, the current lender.

In order to negotiate for HAMP, I had to negotiate with the 2nd mortgage. I currently am paying $75 a month to Ditech that goes directly to pay down the loan balance. But I just received a letter from a collection agency saying I have options to settle the account on my 2nd mortgage. I looked up my credit report and saw that my 2nd is showing as 'charged off.'

When I called to make my payment to Ditech, it was very very awkward. The agent kept reiterating, 'You are making this payment on your own accord. Disregard what the prior agent stated. You initiated the payment correct?'

These comments make me wonder what is going on. I don't know who to call or ask about this. Am I able to disregard Ditech or do they still hold the lien on my house?

Hi Leonor, Kate here...

Some large lenders also own a collection division which may be the case with Ditech, who probably still holds the lien on your house.

But Ditech is obviously not playing by the rules so it's hard to know what's what. Except for this. They should not be trying to double-dip by collecting directly from you and through a collection agency.

I doubt you'll ever get a straight story from any collection agency. But you could try to contact a supervisor in Ditech's loan servicing to end this nonsense. However, I caution you to get any promises in writing. Verbal commitments are useless. Totally.

If you can't get to the bottom of this, I recommend filing a complaint with the Consumer Financial Protection Bureau (CFPB). Along with other government sources, you can find the contact info at How to Contact Washington DC, Your State Government Officials, and CFPB.

Another idea is to call a HUD-approved housing expert as I told AJ (see above).

You'll also want to read Whistle Blowers and HAMP Loan Modification Scheme Exposed.

Best wishes, Kate

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