ORANGE COUNTY, Fla. — Many homeowners struggling to pay bills during the pandemic have the chance to skip three mortgage payments.
Action 9 consumer investigator Todd Ulrich found the forbearance offer that's part of the federal stimulus package could turn into a trap.
Some owners could be forced to pay everything back right away and can even face foreclosure.
"I think they’re really trying to take my house,” Tracy Crapps said.
That's what the veteran told Action 9 months after his lender allowed him to skip three mortgage payments when Hurricane Irma pounded his neighborhood.
But what seemed as sweet relief, he claimed, turned into a horror show.
He thought the payments would be added to the end of his loan.
"They want it all now in one lump sum," Crapps said.
The lender was asking for nearly $5,000 he didn't have, so the bank threatened foreclosure.
Now, central Floridians are facing a pandemic medical crisis and once again mortgage companies are allowing overwhelmed homeowners to skip payments.
But consumer and real estate experts warn, not so fast. Some lenders will demand full repayment once the three to six month forbearance ends.
“But on day 91, you have to pay everything back, and that's not much relief. Most people will end up worse off instead of finding a way to just make the payments,” said real estate attorney Karen Wonsetler.
Some lenders have a better alternative. Offering a loan modification or refinance after forbearance.
Mortgage rates are rock bottom. But add in closing costs and more years of payments, that could also be a trap.
“You may spend thousands and thousands of dollars in lender fees and costs that you would avoid if you don't do forbearance at all,” Wonsetler said.
After Hurricane Irma, Rebecca Clark's three month forbearance ended with a forced refinance and a new 30 year loan.
"And to hear I would have to start all over, it's devastating,” Clark said.
The giant stimulus program requires federally backed mortgages to offer forbearance up to 180 days. But consumers should always check the lender's fine print.
When it's time to make payments again, homeowners might find themselves in the hole.
“It doesn't mean it's going to be good for your family,” Wonsetler said.
Whatever homeowners choose, they should not skip any payments without contacting their lender first.
It’s important for consumers to find out what the fine print is, when it has to be paid back and how costly that will be.
© 2020 © 2020 Cox Media Group