Maryland has stopped all evictions, including those resulting from foreclosure sales. The question is, should you, the homeowner, take any proactive steps if you fear that you will not be able to meet your mortgage payments? Maryland will still allow foreclosures to be filed, but upon filing, the actions will be stayed. I am actively encouraging feedback from the homeowners, substitute trustees, servicers and lenders.
Should you be Proactive and Contact Your Servicer That you may be in Trouble?
I ran the following Google search: Should I contact my lender if I can’t keep up with my mortgage? Here are two articles that may be informative.
Contact your mortgage lender: Payments may be deferred as coronavirus pandemic causes worker hardships Mortgage lenders offer help to borrowers affected by coronavirus.
Mortgage lenders offer help to borrowers affected by coronavirus.
The mortgage lenders article makes the following points:
A mortgage forbearance is an agreement between you and your
mortgage servicer that lets you either stop making payments or lower your payments to an affordable level on a temporary basis during your hardship . . .
“Be aware, however, that you will need to repay the amount
that was reduced or suspended, either as a lump sum or by adding to your normal monthly payment,” says Leslie Tayne, founder and attorney at Tayne Law Group.
The takeaway from this is quite simple. You are signing a contract with legal significance and penalties if you breach the agreement. While Foreclosures are stopped in Maryland, the duty to pay your mortgage continues.
Other than the two articles mentioned, most of the articles were pre-coronavirus. This tells me that there is no clear direction on this issue, nor can there be since nobody knows the extent to which Americans will be affected. We do not know whether there will be creative solutions offered in the future. This does little to help you determine whether you should contact your servicer.
If we are to learn from history the let’s examine one article from 2011. The article stated:
Loan or Mortgage Modification. This is a good place to start when you feel the mortgage payment growing to a place you can no longer handle it. Whatever you do at this point, DON’T WAIT!! As soon as you know your mortgage is too much for you, contact your lender. Rest assured, the lender does not want your house. They are in the lending business, not the real estate business.
Before the Coronavirus epidemic hit there were homeowners who had recovered financially, able to pay their mortgage, but the lenders were
foreclosing anyway because the lenders refused to put arrears at the back end of the loan. Do not believe everything that a lender tells you. Each homeowner should know their options. Regardless of whether the lender wants your home, they want your money and if it means taking your home to achieve that goal, they will take your home.
This brings us back to the original question: should you, the homeowner, take any proactive steps if you fear that you will not be able to meet your mortgage payments. My answer on this date, March 25, 2020, is a strategic no. I say this because:
- Things are changing on an hourly basis. Why would you want to contact your lender at
this point, when you do not know what your options are?
- Recall the point made about forbearance agreements: You are signing a contract with legal significance and penalties if you breach the agreement. If you are not in foreclosure at this time, waiting a week will not hurt you;
- If you are currently in foreclosure, that is, a case has been filed, then contact a foreclosure defense attorney. Maryland may have suspended foreclosure actions, but does that suspension also suspend time limits?
Since we don’t know the answers to key questions, I suggest that you stay the course, meaning:
- Do not use the Coronavirus as an excuse not to pay your mortgage;
- If you are currently in foreclosure, you should get a foreclosure defense attorney – now; and
- Stay safe.
Remember this date, March 25, 2020. The above suggestions are good for only seven days. I will update this blog within the next few days.
My best, Jerry Solomon