Illustration for article titled Know Your COVID Mortgage Forbearance RightsPhoto: pogonici (Shutterstock)

ON new CFPB report Says Some Mortgage Lenders Failed To Follow Mortgage Forbearance Act During COVID. Lenders have misled borrowers as to their rights, imposed unauthorized penalties, and wrongly evicted tenants. Here’s what you need to know and how to report an unscrupulous lender.

Know your rights as a borrower

The CARES law provides for a complete freeze on payments until March 31, 2021 if you claim financial difficulties due to COVID. Federal grant borrowers who choose to participate indulgence may suspend payments, including interest or penalties, for up to 360 days from the date of the application (this does not apply to personal loans, but many banks have voluntarily offered 180 days of payment relief).

In addition, the law– –in connection with a recent order from President Biden– –stipulates that foreclosure and foreclosure measures must be interrupted by March 31, 2021. The CARES Act also contains provisions for withholding negative credit reports when relief has been granted.

How to Forbearance

This part is simple: all you have to do is ask your lender (it may be a good idea to have a written record of this, or at least take notes if you call for indulgence). Anecdotes suggest that lenders usually don’t ask for hardship evidence either.

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Do not let your lender mislead you

Now that you know your rights, make sure your lender isn’t breaking the rules. Per Bank rateExamples for this are:

  • Pull out forbearance processing. In some cases servicers have been slow to process forbearance requests, according to the CFPB. This resulted in some borrowers missing payments and affecting their creditworthiness.
  • Forbearance of borrowers without their knowledge. In other cases, they thought they were simply reading forbearance information on a service provider’s website or discussing financial issues with agents over the phone. These borrowers did not understand that they had requested an indulgence or that the servicer would process them.
  • Incorrect collection instructions. The CARES Act promised borrowers that they would not have to worry about mortgage payments for six months to a year. However, some servicers sent notes leniently letting borrowers know that their accounts were overdue and that they might face late fees and dings for their credit scores. These notices “may cause confusion for consumers registered in forbearance of the CARES Act,” the CFPB said.
  • Misleading statements about flat-rate payments. CARES does not require borrowers to pay a large amount for missed payments after the forbearance ends. Instead, the borrower resumes the monthly payments. However, according to CFPB, some servicers told borrowers they would have to make lump sum payments to cover any missed monthly payments when the forbearance ends.

How to File a Complaint

First, contact your lender or credit service provider directly as they will be the quickest way to resolve your concern (especially if it is a relatively minor error that could simply be a mistake, such as an indulgence request that is taking too long to process lasts).

If this doesn’t work, or if you think your lender has intentionally evaded the law set out in the CARES Act, contact the Consumer Financial Protection Bureau (CFPB) by filing a complaint Here. The CFPB will work on your behalf to find a solution (most companies will respond to complaints within 15 days).