7 On Your Side clears up COVID-19 mortgage mess

BROAD CHANNEL, Queens (WABC) -- Millions have applied for financial forgiveness to give them at least a three month reprieve from paying their mortgage, but 7 On Your Side's found out there's a very big catch for tens of thousands of homeowners that could wind up socking them with a tidal wave of mortgage bills in just a few months.

Like many families, the Doyles are suddenly struggling to stay above water after Patty Doyle's husband got furloughed from his job as a bartender in early March. For the first time since buying their home in Broad Channel, the family won't have the money to foot their home loan.

"I didn't sleep for about two days," Patty Doyle said. "We've always made our payments. Even through Hurricane Sandy, we made our mortgage payments."

The superstorm's damage pushed the Doyles out of their house, which was gutted after the storm's surge, for months. Back then, like now, their lender offered a three month deferment on their mortgage. But now, there's one big catch.

"At the end of that three months, which would be July 1, I'd be responsible to pay April, May, June and July," Patty said.

They'd have be ready to write a check for four months of payments, basically $7,000, all due on July 1.

"We don't see how we'd be able to pay that," she said. "If we're having trouble making payments now."

And if she didn't pay, her lender stated in a letter, it could ding her credit and worse, even start foreclosure proceedings.

"The least they can do is offer us a little assistance until we're back on our feet," Patty said.

Since the Doyle's mortgage is with a private lender, their deferment's not part of the CARES Act, which covers government backed loans, doesn't add up missed payments or charge you all at once. Instead, it pushes payments to end of mortgage

So we made the appeal to the Doyle's lender, PHH and Ocwen Financial, who made a big change. They forgave next month's bill and will tack that payment onto the back end of her mortgage, just like the government backed loans.

"You did a great job," Patty said. "You really did you go so much done so quickly.

PHH and Ocwen clarified their whole mortgage deferment program. Now, it won't be foreclosing on customers if they can't pay lump sum at the end of the deferment. They will instead work with each customer to either extend the deferment or modify the mortgage.

The big takeaway is that when it comes to private mortgages, procedures are changing sometimes hour to hour. Call your lender and tell them your situation, and try to work out a plan together.

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