With enhanced COVID-19 unemployment insurance approved by Congress, many homeowners
may be able to receive close to 100% of their previous income by filing for unemployment. This
could enable homeowners to continue paying their mortgage. If this is possible for homeowners,
it is the always best option and will result in no extra costs now or in the future.
If it is not possible, here are our suggestions for what a homeowners should expect from their
lender during this crisis. MAHA is ready to help those homeowners who took our class in the
past and/or have a mortgage from the Massachusetts Housing Partnership SoftSecond or ONE
The key to all of this is what lenders will do in negotiating with borrowers. It is typical for
lenders to offer forbearance but then to expect repayment over a relatively short period of time
(3-6 months or so). That will increase a homeowner’s monthly obligation substantially as they
try to pay their regular mortgage payment plus a portion of what is owed.
Given that the recovery from this crisis is likely to be slow for many, the only feasible solution is
to move the missed payments to the back end of the loan when the borrower has many more
options. What is key, however, is that the lender not capitalize the arrears and collect interest on
the missed payments. In one scenario for a borrower that is in the second year of paying their
mortgage, missing $1,700 in three months of interest payments would result in them paying an
additional $4,490 by the end of the 30 year term.