It just made no sense to the many homeowners seeking payment breaks on their mortgages after losing their jobs because of the novel coronavirus.

They followed the advice of government officials and contacted their loan servicers to talk about payment relief if they couldn’t pay their mortgage. Under the Coronavirus Aid, Relief, and Economic Security (Cares) Act, they had a right to ask for an initial forbearance of up to 180 days. If additional relief was needed, they were entitled to a 180-day extension. Interest still accrues, but fees and penalties are waived.

To qualify for the forbearance, the loan has to be federally owned or backed by one of these federal agencies or entities: Fannie Mae, Freddie Mac, the Department of Housing and Urban Development, the Federal Housing Administration, the Department of Agriculture (USDA direct and guaranteed loans) or the Department of Veterans Affairs (VA loans).

Apparently, the details of the Cares Act got lost in translation.

Borrowers were instead offered 90 days of forbearance, and — here’s what outraged many — servicers told them that past-due mortgage payments would need to be paid in a lump sum once the forbearance ended.

“We contacted the company that holds our mortgage and were told we could defer our payments for three months, but then those three payments would be due all at once, along with the following month’s payment,” a Michigan reader wrote. “If we can’t make our monthly payments now, why would a mortgage company think we can make four months’ payments at once?”

Others emailed with similar stories after seeking mortgage relief from their lenders.

“They told me that we could not make a payment for up to three months, but then all three months would be due at one time,” another reader emailed. “If I can’t make a full payment now, how the heck can I make three months of payments?”

People complained about not being given any options other than making lump-sum payments.

Almost 4 million homeowners are in forbearance plans, the Mortgage Bankers Association (MBA) reported last week.

As unemployment claims have shot up, total loans in forbearance increased to 7.91 percent as of May 3, up from the 7.54 percent the week before. In comparison, only 0.25 percent of all loans were in forbearance for the week of March 2, the MBA said.

“The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression,” said Mike Fratantoni, MBA’s chief economist. “It will not be surprising if the forbearance numbers continue to rise.”

With more people seeking payment breaks on their mortgage, it’s crucial that lenders provide accurate information to homeowners worried that they will lose their homes.

To help with this effort, the Consumer Financial Protection Bureau and the Conference of State Bank Supervisors have put together a coronavirus-related “Consumer Relief Guide.”

Kathleen Kraninger, the director of the Consumer Financial Protection Bureau, acknowledged in a news call that homeowners weren’t given the correct information.

“One of the challenges early on with respect to forbearance was the concern about what happens after the deferral period,” Kraninger said. “A number of servicers were telling consumers that they would be required to pay a lump sum of the payments that were deferred after the forbearance period. … That is not the case.”

Kraninger said mortgage servicers who are handling federally backed loans have been given updated scripts to assure borrowers with loans covered by the Cares Act that they have a number of payment options once the deferral period ends.

The guide provides links to scripts used by the various federal agencies. It’s useful if you need a pause on your mortgage payments to check whether what you are being told about your forbearance options matches up with the information you should be receiving.

“In most cases you should receive multiple options to repay the monthly payments that were not paid during forbearance over time,” the guide says.

One option might be a loan extension in which the delinquent balance would be added to the back end of the loan. The past-due payments would effectively extend the term of the loan.

Another option would be a repayment plan that would allow a borrower to spread missed payments over a specified number of months, added to the person’s regular mortgage.

“If you can’t afford the additional amount, but you can resume making your normal monthly payment, we can leverage alternative ways of paying back the suspended payments in a manner that is affordable,” a Freddie Mac script suggests a servicer might say to a financially distressed borrower.

Privately held loans are not eligible for forbearance relief under the Cares Act. Investors who own these mortgages get to set the terms of any assistance. However, borrowers should still contact the lender to find out what mortgage assistance is available.

The Consumer Financial Protection Bureau has also created a Web page with information and coronavirus-related resources around financial issues.

By June or July, many homeowners will be coming to the end of their 90-day forbearance period. If you need additional mortgage relief, understanding your options can help you negotiate a more affordable repayment plan.

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Reader Question of the Week

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Q: If a small business was set up as an LLC to separate it from the owner’s personal assets, and that business goes bankrupt as a result of covid-19 and the federal government’s anemic response to supporting small businesses, can the creditors come after the business owner for his/her personal assets (home, 401(k), college fund, etc.)?

A: “The small-business person would be protected if the LLC was filed,” said Andrea Bopp Stark, a staff attorney with the National Consumer Law Center focusing on fair debt collection practices. “But the big caution here is that the financing for many small businesses often includes personal guarantees given by the business owner and may be secured by a lien on the owner’s home or other assets. The guarantees would continue to be enforceable against the person and her assets.”

Retirement Rants and Raves

Your thoughts: I’m interested in your experiences or concerns about retirement or aging, especially during this pandemic. You can rant or rave. Send your comments to Please include your name, city and state. In the subject line, put “Retirement Rants and Raves.”

Many readers continue to ask when their $1,200 stimulus payment will be sent.

“I am 66, retired and receive Social Security, but have not received a payment,” one reader wrote. “Will I get a payment?”

Another wrote: “I am a widow receiving Social Security. I have not received a stimulus check yet. I don’t understand where it is?”

The Social Security Administration has posted a guide that provides stimulus payment information for Social Security recipients receiving retirement, survivors, disability and Supplemental Security Income (SSI) benefits.

Here’s some economic impact payment coverage that may help explain why you may not have received payment yet: