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GBR Mortgage Lenders Association on Mortgage Deferment

August 19, 2016
To: Greater Baton Rouge Association of Realtors
From: Bill Holt, President, Greater Baton Rouge Mortgage Lenders Association
Subject: Mortgage Payment Relief Process

First, it’s with great sadness that I write this memo knowing that so many in our area are suffering from the recent flooding event. There are thousands who are trying to put their lives back together after losing their belongings and in many cases, their houses. There have been social media posts from those in the real estate community advising their clients to take advantage of the three-month payment deferment option. This memo is to clarify how this process works, so accurate information can be delivered to all homeowners through the local Realtor network.

Most people have a loan that is owned or in a security by one of the Government Sponsored Enterprises: Fannie Mae, Freddie Mac, Ginnie Mae (USDA, FHA, and VA). The mortgage company where the monthly payment is made is considered the servicer of the agency loan. In these cases, the servicer is only able to offer the forbearance terms that the agencies allow. These forbearance terms are evolving as the agencies learn more about the magnitude of this event. The way this works is the borrower must request a forbearance period of 90-days and if approved, they will not have to make their mortgage payment during this time. At the end of the forbearance period and in the event there is no further assistance needed, all deferred months of payments come due and the account must be brought current or it will be considered in delinquent status. There is an option at this time to apply for further forbearance or a loan modification but it may or may not be granted depending on the situation of the client.

There is a process of applying for the forbearance and/or loan modification and it does require some work on the part of the client. This process may bring frustrations out of some folks, as this is already a stressful time. The local mortgage lenders association is sending this memo as a resource in hopes that the Realtor community can help affected homeowners by managing expectations if they are asked about payment deferral options. Lastly, none of us in the real estate finance industry want to create any further hardships for our clients. We want to be a resource to those in our community and will assist all homeowners through this process to the best of our ability. If you have questions, please feel free to reach out to me and I will do my best to get you accurate information to pass along to the communities we serve.