Home » Blog » COVID Forbearance » Can Bankruptcy Save My Home if Forbearance Fails?
Will Bankruptcy save my home if forbearance goes wrong

Can Bankruptcy Save My Home if Forbearance Fails?

Forbearance Gone Wrong?

A forbearance is a hardship workout option available to homeowners having a financial hardship.  The typical terms of a mortgage forbearance are payments can be “skipped” for 90, 180, up to 360 days for those that are affected by COVID-19.

What can go wrong is that the Government lifted the qualifying guidelines for receiving a mortgage forbearance and made participation available on the honor system.  You only have to check a box and say you’ve been impacted, you don’t have to document the hardship.

This is great news for the millions that are out of work and are experiencing a documentable financial hardship.  The problem is, I see too many so-called professionals, people in a position of trust, are encouraging people to enter forbearance and skip your payments.

This is what can go wrong…

At the end of your forbearance term, all skipped payments are due at once.  Now, this isn’t realistic for most families, especially if you haven’t made a payment in 6,9 or 12 months!  Most servicers will have other options for reinstating your loan, but we don’t yet know what the terms will be.

Common forbearance reinstatement workout options:

  • Add skipped payments to current payment and pay off over a period of time
  • Payment deferment to end of the loan, due at refinancing or change of ownership.
  • Loan modification
  • Deed in Lieu of Foreclosure (DIL)

I’ve heard many stories about folks whose mortgage was put into forbearance and they didn’t know they actually asked for it.  If you can afford to make your mortgage payments during COVID-19 shutdown, you will avoid a lot of unnecessary headaches.

My biggest concern is that these options will be limited if you cannot prove a hardship to the satisfaction of the servicer’s guidelines.  Hope for the best, but prepare for the worst.  That’s what we’re trying to do here.

Bankruptcy Expertise

I met Christine Kingston of Surf City Lawyers shortly after the great recession of 2008.  We collaborated on an ambitious campaign to educate and empower homeowners trying to navigate the recession gracefully and be in a position to buy again as soon as possible.

Considering Forbearance? Get the Facts First - ForbearanceReport.com

During the recession, bankruptcy attorney ambulance chasers put many homeowners in a bad situation by giving them bad advice about what it means to include your mortgage in bankruptcy.  Bankruptcy is a powerful tool when used correctly.  Used incorrectly, you could add years to your recovery back into homeownership.

I asked Christine to join me for a conversation about what Bankruptcy options might be available if someone ended up in a situation where your forbearance goes wrong?

Our goal here is to give you access to professionals without being in a situation where they are trying to earn your business.  I personally found this conversation to be extremely empowering.  There’s some really good advice here from a real expert.  I hope you find this conversation as valuable as I did.

If you’re in California, Christine offers to answer any questions you may have about bankruptcy options:

Christine Kingston, Esq
Surf City Lawyers – Huntington Beach, CA

Can Bankruptcy Save My Home – Transcript

– Excellent, we are live.

Okay, well, I wanna thank everybody for being here anybody that watches this live or that watches the review. My name is Scott Schang. I’m a mortgage broker in California. And I have invited a good friend of mine today who we went through a journey together, I would say, that feels a heck of a lot like what’s coming down the pipe right now.

– It seems like forever ago, doesn’t it?

– It does, but it wasn’t that long ago. I mean, well, it was right after the crash. And one of the things that I did is I started learning all of the guidelines for helping people buy after bankruptcy after short sale foreclosure. And Christina’s local to me and she was doing the same thing.

She was helping consumers understand what their options are, what their bankruptcy options, and their options for preserving homeownership, putting themselves in a position where they could potentially save their home. Buying them time, all kinds of things like that. And the reason why I love Christine. First of all, she’s unfiltered and ruthless. And she’ll tell you the truth.

– Thank you.

– The other thing is when the market crashed last time, I called them ambulance chasers. The bankruptcy attorney ambulance chasers just went after homeowners and tried to get them to file bankruptcy, but didn’t explain what bankruptcy means. And that’s where you and I really had these great conversations because all of these homeowners were like, “My attorney told me that “I don’t have to make payments anymore.

Considering Forbearance? Get the Facts First - ForbearanceReport.com

“I’m cool,” right? So let me lay a little bit of groundwork here before I bring in your expertise. So with the passing of the CARES Act, the government basically required and Fannie Mae and Freddie Mac, FHFA, the Federal Housing Finance Agency, determined that forbearance is available to any homeowner who is impacted by COVID-19.

Now the challenge with this is so forbearance, they didn’t make this up. All lenders have forbearance programs. It is a hardship program. It is a workout program, there’s nothing positive about it. But the government came in and did a couple of things just to make the hurdles a little lower and make it a little bit easier.

The first thing that they did is they said, “You don’t have to prove a hardship. “You just have to say you had a hardship.” And that could be a checkbox. But you’re attesting to the fact that you are impacted by COVID-19. And so you don’t wanna make you… You can’t make your payments for the next few months.

Standard forbearance means you skip your payments for three months. Standard forbearance also dictates that in the fourth month, all four months’ worth of payments are due at once, right? So that can see as a problem, well you could see where that could be a problem.

Now, if you truly are impacted by COVID-19, and you lost your job, all of these things we’re talking about are here to protect you. And they’re going to protect you and I have as much confidence as you can have in a federal government that they’re going to do whatever they can do and this is not political.

This is just the machine. Right we have the challenges we’re running into is we have bureaucrats that are making decisions, but they’re not consulting people that are actually in the business of helping people get homes and these kinds of things and bankruptcy and all this stuff. So problem number one, you don’t have to prove bankruptcy. They’re calling it the honor system.

Okay, what I’m starting to notice is, is that I’m seeing more and more consumers ’cause we built this resource called The Forbearance Report. That website is for anybody to go to, to learn as much about forbearance as you possibly can from somebody that’s not trying to get anything from you. So I’ve done this. This isn’t my first rodeo.

We went through this in the crash, and we spent many, many years helping people through these challenges. And my spidey senses are going off like crazy right now that we’re going to have these challenges again, moving forward. So all right, I rabbit hole’d a little bit. So let’s go back. So Fannie Mae came out and said if your loan is owned by Fannie Mae or Freddie Mac, which is approximately half of the mortgages that are out there.

You have what’s called deferment available to you. Now, the guidelines for deferment are that you have to be late a minimum of 30 days late three months in a row. This is straight from Fannie Mae’s guidelines, you have to be late three months, 30 days late three times in a row, you cannot be more than 60 days late.

Considering Forbearance? Get the Facts First - ForbearanceReport.com

This brings an interesting question ’cause some of these lenders aren’t letting people make payments. And then you have to be current in the month that you defer the payments. So you have to come up with at least one month and then they’ll take the rest of them, they’ll put them on the end of the loan as a balloon payment.

That’s one option. But that doesn’t address the other half of the lenders that are out there. So almost all of these services, have a hierarchy of workouts, and the hierarchy of workouts are you pay all the money upfront. You spread those missed payments out over the next few payments, so now you’re paying more or deferment is potentially an option and then they start looking at loan modifications.

And loan modifications is really where I start to get nervous because we’re already seeing these lenders or the servicers, mass hiring inexperienced people to pick up these phone calls and answer calls from consumers. So the customer service people and the services, they’re not screening the people. They’re not asking them questions. They’re putting people into forbearance, and they don’t necessarily know it.

On forbearance report, we’re already getting consumers coming back saying, “My wife was clicking around the website,” and I actually have a personal friend that that did this at Wells Fargo. We were clicking on the website trying to get more information. Next thing they knew they were in forbearance, they tried to make a payment, the lender won’t take it.

So I think these things will work themselves out. I’m not super worried about that. And again, I do think that if you were truly impacted by COVID there is a path here that is they’re going to do their best to help you preserve your homeownership. But I’m telling you right now, they are not guaranteeing that everybody is gonna save their home ’cause there’s no way that’s gonna happen.

And my biggest fear is the folks that can make their mortgage payments. But they took forbearance because oh, and this is just absolutely disgusting. But I’m seeing loan officers and real estate agents go on to Facebook, and tell people to start skipping their payments because the government’s giving away money. And I’m just like, “Oh my God we gotta do something about this. “I gotta call Christine. “We gotta have conversations, “we gotta talk to people. “We gotta get stuff up out there.’

– We’re gonna straighten this out.

– We’re gonna try to straighten this out.

– We’re gonna straighten this out, for crying out loud.

– I’m gonna keep having all these conversations about forbearance. I’m gonna keep providing feedback that I’m getting from the website and helping people understand what’s going on what the servicers are saying. But, Christine, I didn’t bring you here to talk about what I’m doing with forbearance.

Considering Forbearance? Get the Facts First - ForbearanceReport.com

I wanna talk about, if forbearance goes wrong, what options do you have? ‘Cause you and I went through this for a long time. A lot of consumers think that if you file bankruptcy that you don’t have to make payments, any mortgage payments anymore. And there’s a lot of different challenges there. So why don’t you get us started here and tell us a little bit about what that… Well, first of all, talk about… Because bankruptcy will buy you time, correct?

– Yeah, a bankruptcy will definitely buy people time. And one of the most powerful tools that we have in bankruptcy is that we can stop the foreclosure. We can stop the eviction process, we stop lawsuits, we can stop wage garnishments and essentially what that amounts to is that we stop all legal proceedings against the debtor, as to the collection of debt, the moment we put you into a bankruptcy case.

It’s called tan Automatic stay. It’s a court-ordered injunction. And a court-ordered injunction is basically an order to do something or not do something. In this case, it’s an order to not collect against the debtor while they’re under bankruptcy protection. That’s the biggest distinction between filing a bankruptcy case and trying to settle and work with your debts outside of bankruptcy, we get a lot more powerful tools, which protect our clients.

It stops all the collections gives them that breathing room that they need so that they can figure it out. What we’re mostly talking about here is chapter 13 of the bankruptcy code. It’s a chapter in a book just like any other chapter, and that’s called a payment plan bankruptcy where you make payments over time.

So what Scott’s talking about, and I like the deferment idea better because a deferment will take whatever you’ve missed all those payments and throw it on the back end of the loan as a balloon payment. My tip for the day Scott would be, and your firm is helping them with these forbearances and things like that?

– No, no. Well if they’re in a situation they have to contact their servicer directly. That’s another piece of misinformation that’s out there.

– Yeah.

– A lot of consumers think they can just stop making their payments. If you do that, it will be reported as late on your credit,

– That’s correct.

– As you contact your servicer, that’s another part of the CARES Act that’s different is that the late payments aren’t going to be reported to your credit right now. And the foreclosure is suspended. So foreclosure is suspended. But that’s only temporary. That’s really only until we’re on the other side of this thing. And it could be three months. It could be 30 days, we don’t know yet. And that’s the challenge.

– So what we’re what we’re gonna see right now is we’re going to see people making these decisions with their own financial situation, maybe thinking that they’re getting a free ride here. And I’ll tell you, Scott, I couldn’t agree with you more. There is no such thing as a free ride. There is no such thing as a free house.

Considering Forbearance? Get the Facts First - ForbearanceReport.com

Right now, there’s also no such thing as a free education. But we’ll go there later. We’ll get back to that one in another video. Yeah, so what’s most important to remember is, you have to understand what it is that you’re getting yourself into. A forbearance. Sure, skip a few payments, and then pay up in four months with the whole enchilada that you just skipped. Now, that’s not really a good idea, because if you can’t afford it now, I’m not sure that you’re going to have enough money in three to four months to get current on that mortgage.

– Well, and here’s the scary part about this Christine is so the initial forbearance period is supposed to be 180 days. I’m seeing most servicers do 90 days.

– Yep.

– But what the CARES Act says is that for 180 days, and which can be extended an additional 180 days if you’re still being impacted by COVID. So you think coming up with four payments is hard? Try seven or 13.

– Right. Well, I don’t know, I don’t happen to know what the average mortgage payment is, but also consider this. If you’ve missed–

– In California.

– Yeah, right, three to $4,000 a month perhaps.

– Could be.

– So think about three, let’s let’s do a hypothetical $3,000 a month, you skip three months, that’s $9,000 that we’ll be due in month four. And if you miss that, they’re gonna let you go further. If I heard you, right. They’re gonna let you go further. So let’s say another $9,000. Now you’re $18,000 behind on your mortgage.

Now if we’re if you’re not able to make all that up, and we’re talking about bankruptcy as a backup plan, under Chapter 13, what would happen is the moment I file the bankruptcy case, that mortgage is deemed current. That’s really good news. Boom, your mortgage current now you’re going to start making regular mortgage payments again, but we’re gonna take that 18 what did we say $18,000 in arrears and we’re gonna put that into a plan and you’re gonna make payments on that over the next five years.

That’s the way we bring mortgages current under Chapter 13, we give you a payment plan, stretch it out over five years. You know, the biggest problem I see with this Scott though, is that they can’t afford it now, they might not be able to afford it in the next six months. They don’t wanna sell ’cause everybody gets, you know, emotionally attached to their home, I get it.

And that’s gonna be also something that you might wanna consider is letting go of the emotional attachment when you’re making these business decisions for yourselves. You know, they get into the middle of it, and they wanna try to save it and they just can’t make the payments.

– Yeah.

– At that point, we might turn them over into chapter seven and buy them some more time in that house maybe buy them some time so they can maybe live a little bit more rent-free mortgage-free. But eventually, they’re going to get evicted. They’re going to get foreclosed upon and they will be forced out at some point.

Considering Forbearance? Get the Facts First - ForbearanceReport.com

– And it’s not gonna be on their timeline, or based on their decisions, they’re gonna be subject to whatever the lender decides to do. And this was the challenge that we had after the big crash of ’08 is that so many people didn’t understand that the lender still had a lien against their property, and they still had the ability to foreclose.

Now kind of the challenges that we had after ’08 is the lenders weren’t foreclosing. So they were letting people live in their homes for years because they had such a big backlog and that was screwing people up with being in a position to buy again later like they could have moved out of their house forgot about their house thought that they gave it back in bankruptcy, didn’t know the lien was out there.

They’ve been renting for five years and they’re ready to buy another house and then they find out they still own this other house and they still have this lien on it. So you know, you bring up a really good point and I’ve been thinking about this, and I’m not sure where I land on it. The difference between now and back then is there’s a lot more equity out there in the market right now folks have a lot more equity. I’m hoping that they don’t hang on until it forecloses because–

– I agree.

– It’s gonna eat up your equity. It’s gonna all go towards attorneys fees and lender fees and all these kinds of things. And you’re not gonna get… you’re going to lose out on a big chunk of change.

– And it doesn’t come in a check. You know, after foreclosure, it’s not like you get a check in the mail for the proceeds. And an average foreclosure Scott, my understanding, I’ve seen some of the numbers, the average foreclosure will cost the homeowner $50,000. They take that out of your equity. So don’t think that, that money belongs to you.

You’re basically spending your own money by letting your house go into the foreclosure status. It gets expensive. They add inspection fees, collection costs, compound interest, they’ll force price insurance if you don’t have your HO 3 homeowner’s insurance policy in effect. Yeah. And people think that they’re getting, something for nothing but they’re really getting duped is what they’re getting. Because they’re making these decisions without being well informed.

And that’s why you and I are doing these videos.

– Yeah, yeah. Try to get the word out. I love the chapter 13 idea. Now, I know there was some bankruptcy changes in the bankruptcy laws a while back that made it more difficult to file bankruptcy. Are you hearing or seeing anything that’s saying there’s going to be a little bit more flexibility with folks that maybe are got impacted by this?

– No what I’m seeing right now is our courts have had to shift to completely virtual. My firm within seven days went from, “Hi, come on in,” to, “No thank you.” We’re gonna talk on the phone. Our courts are now moving hearings forward telephonically. We’re doing Zoom hearings and telephonic hearings and appearances. The rules are not loosening up for bankruptcy.

But I find it actually quite ironic because I think the bankruptcy code changed in 2005, about three years before the economic crash. So I’m thinking the banks knew what they were doing when they made it harder in 2005, for people to file bankruptcy. But what they didn’t speculate, I don’t think Scott is the enormous volume of unemployment. So what I’m talking about is something called the Means test for chapter seven.

And for chapter 13, it would discernment their disposable income and the amount of their plan payment. These are backward-looking numbers, and they changed that back in 2005, to make it harder for people to file chapter seven. But what happens is when you become unemployed, you almost automatically become eligible to file under chapter seven.

Then the only other thing that we wanna be concerned about is how much equity do you have in that house. And what do you have to protect? So then my job is to also to look at that asset protection as well, right?

– If you think you’re going to get because this, really all we’re talking about is if you lost your employment and you haven’t found employment yet. That’s kinda, that’s pretty much what we’re talking about here is buying time until you can get back on your feet and start making these payments.

– Well, yeah, and what I want to emphasize, though, is if they let’s say, for example, they get six months behind, and now they wanna come into chapter 13. Listen, if you want a payment plan under chapter 13 of the bankruptcy code, you have to be making income, which means you have to prove that you have the money available to make those payments.

I will not take a client on a payment plan without sufficient income or resources, meaning that we can ask family or friends to help us but they have to sign a declaration under penalty of perjury that they’re willing to do that. That they’re willing to help you to make those numbers. I’ve had a few cases where there’s family that have stepped in to help people. So that’s not unusual. But it’s burdensome on just more than the homeowner. If that’s the case.

– Well, you bring up a really good point. And I did an interview on Tuesday with a friend of mine that owns a credit restoration company, because we’re seeing credit scores getting hit because of these forbearances. So the late payments aren’t being recorded, but forbearance is being reported. And it’s pulling it out of the credit scoring system, and it’s dropping people’s credit scores by 30 points or so.

– Wow.

– And it was funny on our conversation, let me just put this up here, Natalee chimes in and says, “I can see this becoming a huge problem “for people just wanting some extra cash for a few months.” And that is our biggest fear is… Because that’s how it’s being presented. There’s people are saying, “Just skip it for a few payments.” I’ve seen agents out there saying, “Buy a new home and don’t make any payments on it.” And that is an absolute nightmare.

We’re not gonna go into that. But what I really really like here, Christine is how you’re kind of focusing on chapter 13. So in the hierarchy of credit and life present and financial preservation. We talked about when I talked to my friend, Sam Parker, from my credit guy, we talked about, if you’re going to fall behind on your payments, let your credit cards, talk to your credit card companies first.

Talk to the auto companies first, they will do forbearance a lot easier than… They’ll do forbearance, and it’ll give you a little bit of reprieve, beg, borrow or steal to make that mortgage payment. If you do end up going into a forbearance program, work with the servicer and try to do your best to do a loan workout with them.

But if that doesn’t work, it sounds to me like this chapter 13 is kind of the court intervening and negotiating with the servicer is that… How does that work? Because I’ve heard situations where through chapter 13 they’ll do like loan modifications or they’ll do, they can restructure the loan in certain ways is that common?

– You know, it’s actually quite amazing. What I found. I know the first round back in 2008, nine and 10, all the way up to 12. The lenders were ramping up on the loan modifications in the short sales and they really weren’t getting it right. Those systems are now fully functional. They’ve got it nailed down.

So yeah, but I’m still seeing borrowers being declined for the loan modifications over and over again, it’s still kind of an exercise in futility. If you can get the application submitted under the homeowner Bill of Rights Act, the complete loan modification packet, while it’s under submission will stop a foreclosure.

– Well that’s in California. So the Homeowner Bill of Rights is California.

– Yeah, and I’m only licensed in California. So y’all listening all over the country. This is just my never to be humble opinion. So, yeah, so what’s interesting is they’re still declining the loan modifications, but ironically, the moment I put them into a chapter 13 and file a bankruptcy case, they’re being offered loan modifications.

Why? And I’ll tell you why. It’s because the lenders and the servicers do not want to handle that extra level of accounting required for a bankruptcy case to be fulfilled. What does that mean? They have to create the current account, they have that suspense account, they put funds in, they screw all this up all the time.

They create this suspense account. They have to receive partial funding from the trustee’s office. One payment coming in from the debtor, and they have to keep all that straight, and they just can’t seem to figure it out. So the moment I file a bankruptcy case, magically, they’ll get loan modification offers immediately. Just because they don’t like the accounting in my world.

– That was lost on me when you said it the first time I didn’t understand what you were saying.

– You get it now huh?

– So I get it now. So well what I’ve seen with a lot of these loan modifications is that they take a long time to figure out the loan modification. They’re not something like, “Hey, we’ll get back to you in 24 hours with your terms.” It still seems like sometimes it takes a long time, they need a lot of paperwork, and then they end up coming back and their payments are higher than they are now.

And then people are surprised that they have to pay back the payments that they missed. So that’s the one thing that everybody needs to be perfectly clear of is that every single payment you miss has to be paid back at some point. It’s just when. And it’s where. But let me circle right back in because what you said was super fascinating. Is if the bank isn’t negotiating with you, and you file a chapter 13 all of a sudden the bank is way more open to working with you.

– Yeah, it’s almost like magic. The other thing that I want to touch base on before you move on, Scott is on the loan modifications, right? We talk about being maybe in three months behind, we talked about being six months behind. But keep in mind as you guys are all thinking about your strategy, and I think that everybody now needs to be sitting down making their plan for the short term and for the long term.

You’ve gotta have a plan A, plan B, maybe even a plan C, and talk to your professionals so that you understand exactly what you’re getting yourself into. Otherwise, you’re gonna, you might end up getting swept up in this tsunami that’s coming maybe three to six months down the road. The further behind they get Scott, the harder it is to get a loan modification.

The more payments that are missed, the harder it will be for them to become current and at some point, they will bury themselves out of being able to save that house. So we can’t delay taking action when we start falling behind. We need to get somewhere within a very short period of time because the loan modification algorithms will price you out when you’re too far behind on that loan. And I’m not… There’s no sweet spot.

I’m sorry, but I don’t have any like, oh, six months or no. I just don’t know what that algorithm is. But the further you behind you get, the harder it’s gonna be for you to get current.

– There’s a lot of moving parts here and–

– A lot of tricks and landmines.

– Yeah, we don’t know the answers. And we don’t know if they’re going to be landmines, but I highly suspect they’re going to be landmines because of the way this was rolled out. And this is completely unprecedented. This was, the economy was rolling along and we flipped the switch and shut it off. And now we’re going to flip it back on and things aren’t going to go back to normal right away.

Now there are a couple of things that I do want to bring up because when we talk about financial preservation and preserving homeownership if you file bankruptcy, that is going to impact your credit, but it’s gonna give you the ability to save your home, potentially right?

– Well, I’m also going to argue that it actually improves your credit. And I’ll tell you why under chapter seven of the bankruptcy code, I’m wiping out the debt. And so what I’m doing is wiping out the debt to credit line ratios. And so, I mean, ironically, it actually improves credit.

The other thing I know is within 12 months of being in a chapter 13 payment plan, your credit score will start going up again. You know Scott, people can buy houses, sell houses, all kinds of things in a payment plan, chapter 13 bankruptcy, so–

– With permission from the judge,

– Yeah, it’s flexible. We’ve got powerful tools we can use to help people.

– This is funny ’cause this didn’t even cross my mind when I scheduled this with you. But now I’m like, I’m like excited that we’re having this conversation. The other reason I like this chapter 13 option is that if you do the seven, it eliminates the debt, but now you really don’t have any leverage and you don’t have any help to help you negotiate the payment plan on that mortgage.

– Chapter seven won’t save the house. It won’t bring the mortgage current. All its doing is wiping out everything else and leaving the liens in place.

– And it’ll buy you about what four to six months is pretty typical of what the stay is. So as soon as that six months is up, bam, now all of a sudden, now, and here’s the worst part about it is the servicer is not allowed to call you, right? So they can’t pursue or they can’t pursue collection.

So the next thing you know, you’re gonna get something in the mail that says notice a default is filed, and that they’ve started foreclosure proceedings. And everything that we are trying to do here. Everything I’m trying to do and everything you’re trying to do is we’re trying to prevent surprises. Go into this thing, knowing what your options are.

It’s not gonna be pretty. You may get bruised and you may get bloodied. But if you’re going in there making conscious informed decisions, then you can at least navigate your family through this and it doesn’t mean that it’s all gonna be butterflies and bunny rabbits on the other side of this.

But it does mean that you’re the one making the choices. Okay, this is a hard choice. But this is what we’re gonna do. And we’re gonna prepare for making this decision as opposed to a knock on the door NOD showing up in your mailbox or what have you.

– And that’s why it’s so much so important to consult with the professionals talk to your professionals call a bankruptcy lawyer. Most consultations with bankruptcy lawyers are free 30 minutes, you can get a strategy session. That’s what I’m calling them now. Because quite frankly, you know, it’s not like someone calls me today and they’re gonna file bankruptcy tomorrow.

A lot of times what they do is they’re gonna call me today and then we’re going to set a plan of action, and then they’re gonna go forward and then I’m going to tell them, “Come on back and see you when you’re ready, “put me in your back pocket “’cause you may not need me after we talk.” It’s not a one size fits all program. It’s a case by case basis.

Your situation is yours unique you might be two feet from retirement or right in the middle of your working career and the rug got pulled out from under you. So each situation is different, but to not plan you don’t wanna fail to plan you wanna plan.

– What I’m pushing really, really hard for in my networks and my communities of other loan officers is we’re pushing really, really hard to get out there. If you’re a consumer. If you’re a homeowner and you’re watching this, reach out to a mortgage expert and talk to them because we know what this is going to be.

Now, we can’t sell you anything. We’re probably not going to be able to help you with a loan or anything. But we are willing to to answer your questions and to help you on forbearancereport.com. You can find your servicer, you can ask questions there. I’ll answer any questions and research anything.

But for my professional friends, my mortgage professionals and my real estate agent friends, find a Christine. Start building your resources start building your team of professionals that you can take with you reach out to your past clients, anybody you’ve sold a home to or have done a house for, and bring this information to them so that they’re making informed decisions.

Because like what Nadalee said is there were a lot of people even on the news on TV, and we don’t have anything else to do but have the TV on most of the day. They’re even kind of saying, “You don’t have to make payments for a month.” I’m starting to see them come back and be a little bit more responsible with the reporting.

But yeah, this whole premise of, “Hey, I just need a little extra cash for a few months.” That works until you have to pay it all back within a couple of months. So man Christine, this was super, super valuable. This is even way better than what I anticipated. And I already knew it was gonna be awesome talking to you. Anything else that you can think of that we should probably share with either mortgage professionals or consumers that may be trying to navigate this situation?

– Well, in talking to your professionals, you know, just make sure that you’re giving accurate information. If you don’t know the answer, I mean, authentically, just say, “You know what, I don’t know the answer, but I wanna help.” And so and that’s what really Scott’s hinging on is, you know, that’s why we stay connected.

I don’t handle mortgage, you know, loans or anything in that realm. I have colleagues and friends like you, Scott, that I will refer people out to because one of the things that we wanna do is we wanna take care of our clients and what does that look like? It looks like they need a village right now they need a whole circle, a team, maybe a tax person, maybe the realtor, maybe the the the bankruptcy attorney and the mortgage broker.

Let’s get everybody on the table. I recommend that you call every professional that you know right now and just have a conversation with them. Get on their calendar. And just talk to them, Ask all of your questions. Just make sure that you’re gathering all of the information that you need before you make a decision. And I know right now, the other thing I wanted to say too Scott is because the immense amount of pressure that we’re all under right now, I feel it. I know you feel it.

There’s been, you know, we’ve all got, you know, waves of depression and sadness, we’ve got people that were losing our loved ones. And we’re trying to survive all of this and figure out what the heck is going to happen next. Listen, we are in this together with you Just like you are.

And it’s only because we’ve got our background and expertise that we’re coming alongside you right now and saying, “Listen, give yourself…” Not only do I want you to go get all the information, then I want you to do what my grandma recommends we make soup out of that. Take time, do not make important financial decisions like that.

– Yeah.

– Take a day, take two days. Think about it, then write it down and make that strategy. If it still makes sense after you’ve slept on it for a day or two, then that’s probably the right choice. I think too many times people get caught up in the drama and the chaos. And then they start making those poor choices and take a forbearance rather than maybe a deferment or they don’t get a loan modification because they didn’t even think about that.

Because sometimes by the time you come to an attorney, like myself to talk about bankruptcy, and the other thing I was gonna say, too, is the sooner you do it, the more choices you will have. The longer you wait, the less options you’ll have likely. If you come in the day before a foreclosure sale. You don’t have time to think about things. So the sooner you do it, take your time. Talk to your professionals. That’s my best advice.

– But I would say that if you’re in a profession if you’re a homeowner and you’re in a profession that you know your job’s not going to come back right away because there’s going to be an awful lot of those, and you can foresee having challenges with income in the foreseeable future. That again, reach out to a professional, just have that conversation with a bankruptcy attorney, get your ducks in a row and start thinking about it.

You know the other thing I wanted to mention, and I wanted to mention a little bit earlier, but I didn’t. When you talk about having expert information. Somebody on the forbearance report, a consumer homeowner left a comment, their loan officer told them that if they filed forbearance, that their credit score would go down 100 points and they wouldn’t be able to get another loan for two years.

And that’s not accurate either. But we are seeing servicers that are saying that if you take a forbearance, you can’t refinance for 12 months. We are seeing that the reason why that’s important is that interest rates are going to be low, way lower than they are right now. As soon as we get through this thing, and they’re gonna stay low for a while. You’re going to want to be in a position to have options. So…

– Let me add one more thing too Scott. Well then, based on what you just said. Let’s get a second opinion, right? And you know, we all have our own individual opinions, even as attorneys, you know.

I might say something that my colleagues might disagree with. And so the other thing too is if you’re hearing something from your trusted advisor, or you call your loan servicer, you call your mortgage broker, and you’re like, confused, but you listen to this video, and then they’re telling you something different.

Get a second opinion, it’s not gonna hurt to call multiple professionals to take notes on each and every one of them. And then ultimately, the decision is yours as to how you’re going to respond and what you’re going to do, in terms of what’s best for your family, and what’s going to get you to your goals.

– That’s it. I couldn’t have said that better collect all the information and then make decisions. And you said another thing that was super important. Nothing is going to happen fast here. So you don’t have to make knee jerk reactions. There is a ton of support, there’s a ton of help.

If you truly are impacted, definitely don’t worry, because you are the ones that all of that $6 trillion was designed to try to help me make sure that you’re gonna make it through this. If at all possible. So Christine, I appreciate this so much.

We’re probably gonna do this again sooner as this starts to work out and as we start getting some feedback and some stories. If you’re in California, Christine Kingston, Surf City lawyers based out of Huntington Beach. Can you work with anybody in California?

– I can work with, well yeah we’re virtual now, wouldn’t that be fun? I’m not admitted in the other districts yet, but that’s like a couple pushes of a button and a little bit of money. I can serve all of California for questions and answers.

Certainly I’m licensed in the state of California. My practice is primarily here in the Central District of California which goes anywhere from Santa Barbara down to Orange County, all the way out to San Bernardino, Riverside, LA and Orange County as well.

– And I’ll put links to your website on all these posts everywhere we’re at. So if anybody has questions for Christine, you can see that she’s not gonna sugarcoat it for you and she’ll point you in the right direction. So thank you so much. This is really, really helpful. I think we’re gonna help a lot of people having these types of conversations–

– Happy to serve.

– And get it out there. So take care of yourself, be safe, and hopefully I’ll see you in a month or so.

– Perfect. Thanks Scott. You take good care and let us know if you need anything. We’re here to serve. Thank you.

– Absolutely. Have a great day.

– You too.

Experienced & Expert Advice

Mortgage forbearance, deferment, and mortgage payment relief options are terms that are a part of many homeowner conversations today as we navigate the fallout from the COVID-19 pandemic.

FindMyWayHome has been a resource for both homeowners and homebuyers that have experienced financial hardship since the great real estate crash of 2008.

This website was built by independent mortgage brokers.  My partner and I have been in the mortgage business for over 20 years each.  We maintain this website to give consumers an opportunity to avoid high-pressure salespeople and get expert advice anonymously.

We published “When Can I Qualify for a Mortgage After Bankruptcy, Short Sale, Foreclosure or DIL” in February 2011, and have been helping folks get back on the path to homeownership after a significant financial hardship ever since. We have answered more than 2,300 questions from homeowners and homebuyers on that one article alone!

For over 10 years now, we have been helping people make more informed and educated decisions about homeownership, and if you find yourself in a challenging place, we’re here to help you recover as quickly as possible and get back on the path to homeownership.

About the Author

Scott Schang

A 20+ year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues and making sense of complicated real estate and mortgage topics on this website since 2007

Do You Have Questions About Qualifying?

Find a Mortgage Expert Near You

Find a Mortgage Expert by State





























New Hampshire

New Jersey





Rhode Island

South Carolina

New Mexico

New York

North Carolina

North Dakota

South Dakota







Washington DC

West Virginia