'Right now, people are set to fail’: Rep. Darren Soto proposing reform to prevent homeowner hardships

VIDEO: 'Right now, people are set to fail?: Congressman Darren Soto proposing reform to prevent homeowner hardships

ORANGE COUNTY, Fla. — A week after Action 9 exposed how a federal program allowing struggling homeowners to skip mortgage payments could be high risk, a local congressman is proposing reforms to protect them.

Consumer investigator Todd Ulrich found, if passed, the forbearance program could offer real relief without fear of losing your home.

It sounds simple and safe. Homeowners who lost jobs can skip mortgage payments now, then repay at the end of the loan.

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But some federal lawmakers, who helped pass the CARES Act that allows forbearance, say it can be a costly trap. Some lenders could demand full repayment within months.

“Right now, people are set to fail when they have these balloon payments. Who loses their job and can’t afford six months of payments, suddenly has enough to pay it all back?” said Central Florida Rep. Darren Soto.

Soto introduced the Save Our Homes Act. This reforms the forbearance offer by eliminating balloon payments some lenders and serving companies could demand.

Families still struggling with job losses and pandemic recovery could not afford the balloon payment, which could trigger costly refinances or even foreclosures.

Soto says forbearance programs during the 2009 great recession triggered waves of foreclosures.

“It devastated hundreds of thousands of families in Florida including central Florida. We want to learn from mistakes from the past and that's what the Save Our Homes Act is all about,” Soto said.

And it happened again after hurricane Irma three years ago. Homeowners who were offered forbearance thought the missed payments would be added to the end of the mortgage.

Ken Gibbs qualified and skipped mortgage payments because of hurricane forbearance. But after three missed payments the lender demanded full repayment on month four. That was money Gibbs didn’t have.

“Stop sending harassing letters that they're going to foreclose on my house,” Gibbs said.

Soto's Save Our Homes Act would eliminate those balloon payments that could be extremely costly since the pandemic forbearance allows skipped payments for six months up to a year.

Without reforms, Soto sees thousands of struggling homeowners at even greater risk.

“Does this consumer protection act stand a chance for passage?” Ulrich asked.

“Yes, and our strategy is to try to get it into the CARES 2 Act that congress is negotiating right now,” Soto said.

Soto hopes this reform will protect homeowners who have already started skipping payments, so they won’t have to pay such dues back until the end of their loans. ​

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WFTV is committed to bringing you the most accurate information about the coronavirus pandemic in Central Florida. (Cindy Kelly)