Important Information for Homeowners Who Sought a COVID-19 CARES Act Mortgage Forbearance
Recently we have uncovered several loan servicers and mortgage companies that have violated federal laws on COVID-19 related mortgage forbearances. Last year, Congress gave homeowners important new rights. Under the federal CARES Act, most homeowners are entitled to a forbearance on their mortgage of between 6 months and a year. During that time, lenders can’t charge any fees.
We are now aware of several lenders and mortgage companies that are violating the law. Our investigation is focused on three areas:
- Companies that charge appraisal fees and other charges while the loan is in forbearance or in order to obtain a forbearance. This includes fees for appraisals and credit reports.
- Companies that reduce the forbearance period or offer less than what Congress authorized.
- Lenders that require you to submit lengthy questionnaires or documents to “prove” your eligibility or hardship.
- Reporting borrowers as delinquent at the end of the forbearance period.
CARES Act and Mortgage Forbearance
Congress passed the CARES Act to help Americans who may be struggling to pay their mortgage and other government backed debts such as certain student loans. Part of that law allows homeowners additional time to make their mortgage payments. A forbearance can help homeowners get back on their feet during short-term financial difficulty.
Forbearance is when your mortgage servicer – that’s the company that sends your mortgage statement and manages your loan – or lender allows you to pause or reduce your payments for a limited period of time.
Although you can get up to a year without having to make payments, a forbearance does not erase what you owe. You’ll have to repay any missed or reduced payments in the future.
Unlike many federal programs, the rules for a COVID hardship forbearance are easy:
“Upon receiving a request for forbearance from a borrower under subsection (b), the servicer shall with no additional documentation required other than the borrower’s attestation to a financial hardship caused by the COVID–19 emergency and with no fees, penalties, or interest (beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract) charged to the borrower in connection with the forbearance, provide the forbearance for up to 180 days, which may be extended for an additional period of up to 180 days at the request of the borrower, provided that, the borrower’s request for an extension is made during the covered period, and, at the borrower’s request, either the initial or extended period of forbearance may be shortened…”
The law makes it clear that homeowners do not have to prove their hardship. Just telling you mortgage company that because of the coronavirus pandemic, you need more time to pay your mortgage is enough. Unfortunately, we recently saw one loan servicer that wanted proof of reduced hours from one’s employer and / or proof of an unemployment application and even a doctor’s note! None of that is required by the law.
We know that Royal Pacific Funding wanted to collect a $500 appraisal fee in order to receive a forbearance. Also illegal.
And Dovenmuhele, a large servicing company that handles mortgage servicing for many lenders, was trying to steer homeowners into their own proprietary 90 day forbearance instead of the program established by the CARES Act.
If any of these things happened to you, you may have a claim against both your lender and loan servicer.
What Mortgages Qualify
Residential mortgages on your primary residence qualify. These mortgages must also be underwritten through the FHA, VA, HUD, USDA, Fannie Mae or Freddie Mac. That means most residential mortgages qualify for special treatment.
Who Is Breaking the Law? (What Lenders Are Violating the CARES Act?)
We have heard from several homeowners recently reporting that their lender was violating the law . The companies they mention include Dovenmuhele Mortgage, Bank of America and Royal Pacific Funding. We think there are many more, including Ocwen, Wells Fargo and others, that may be violating the law.
Dovenmuhele Mortgage claims to one of the oldest mortgage servicers in the nation. It is also one of the largest. Take a look at some of the reviews, however, and it’s clear that simply because they are big or have been around for a long time doesn’t mean they are doing a good job. BBB says their customer reviews average just one out of five stars. Read the reviews yourself, they are shocking.
Royal Pacific Funding has somewhat better reviews but they are still no one we want to do business with. One of the most recent reviews says, “This company single handedly ruined my home buying experience.”
As noted earlier, our investigation is certainly not limited to these companies. We will investigate and prosecute ANY bank, lender, mortgage company or servicer that is violating the CARES Act rules on mortgage forbearance. No lender should be allowed to use the pandemic to prey on struggling homeowners, particularly when many were out of work or their hours cut (or their jobs eliminated).
We are seeking veterans and any other holders of government backed mortgages who may have been charged for appraisals or other fees after seeking a COVID 19 mortgage forbearance. If you were reported as delinquent after the forbearance period ended you may have a claim. We are also seeking anyone who was asked to “prove” their hardship, submit documents or complete lengthy applications. Finally, we are seeking anyone who was steered into a shorter forbearance than allowed by law or pushed into the lender’s own proprietary forbearance program.
Our team of mortgage fraud lawyers have collected hundreds millions of dollars from mortgage companies. If you were wrongfully charged a fee or are aware of other CARES Act violations, we want to hear from you.
Contact us online or by email at . We are considering a class action and cannot accept telephone calls at this time nor can we provide individual representation. (We know that finding a lawyer to take a smaller case or big bank is difficult. That is why we are investigating these claims as possible class action cases.
If you write to us, here is what we need to know!
1. Did you suffer financial hardship due to the COVID-19 pandemic?
2. Did you request a forbearance on your mortgage (residential home loan) in connection with your hardship?
3. Is your loan underwritten through the FHA, VA, HUD, USDA, Fannie Mae or Freddie Mac?
4. What company did you request a forbearance from (e.g. your bank, lender, mortgage company, or servicer)?
5. Were you charged any fees in order to obtain a forbearance on your loan?
6. Were you required to submit any questionnaires or documents to “prove” your eligibility or hardship?
7. Were you charged any fees, including appraisal fees, while your mortgage loan was in forbearance?
8. Did your bank, lender, mortgage company, or servicer reduce, or offer, a forbearance period of less than 180 days?
9. Less than 360 days?
10. Was your loan reported as delinquent at the end of your forbearance period?
11. Are you a veteran and/or hold a government backed mortgage?