Hello, everyone. Thank you so much for joining us on “This Needs to Be Said”, as we talk with our attorney friends, and we help you to feel more confident about asking them for help, because they’re here to help you reset your life and just be able to move forward. And if anybody can identify with the last two years, which I think everybody can, we’ve been affected one way or another, we have been down and out and we need somebody we can trust to help us get back on our feet. Our friend attorney Charles Laputka, is coming to talk with us about some of those things, to get us back on track, and our topic today is “mortgage forbearance”. Now I’m not going to tell you what I think it means.
I’m going to let him tell you what it is and how it can help you. How his information can help you so go ahead and take pen and paper out. Class is in session. Welcome back attorney. Look, how are you?
I am wonderful. How are you today everything well?
Everything is well; did I tell you I have a grand baby?
No. Congratulations! Boy or girl?
Oh boy. Oh boy. I got a boy and a girl. I have a new girl. She’s three and a half months old.
Oh boy. Congratulations. No, you hadn’t mentioned that. It’s such a wonderful thing. And you know, that’s, the spring is in the air. There’s a new grandchild, all that great stuff. I was very excited to see here in Pennsylvania this week with spring in the air, that the flowers are starting to come through. And, you know, I hate when I have a call like this. I don’t like to date the call, but you know, today we’re going to talk about some specific things that are happening in the spring of 2022. So it’s okay to discuss the weather and those types of items. And what’s happening in the spring of 2022 is mortgage forbearances are finalizing. Andwhat I mean by that is there are a lot of banks, a lot of mortgage lenders that allowed folks to go into a forbearance program during the pandemic, you know, at the beginning or whenever they got into trouble.
And generally a forbearance program is basically where the mortgage company lets you take a break from payments. And one of the problems that I’ve seen with this is people have taken a break from payments for ayear or two years, and they have adjusted their lifestyle accordingly. Meaning if you have a $2,000 a month mortgage payment and you have not been paying that $2,000 per month for the last year, you now have a $24,000. You know, in theory you should have $24,000 saved in the bank. But a lot of posts folks have used that money to handle necessities, adjusted their lifestyle, you know, buying a new car because all of a suddenthey feel that they had some disposable income or going out to eat more often or, you know, maybe something less cynical, such as just doing some deferred maintenance, buying tires, putting on new brakes, getting that new water heater at your house or a new roof and you know, whatever people have used this money for, it seems that now these amounts are coming due and the folks don’t have the money to pay it.
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So yeah, a deferment is basically just taking a break for awhile and we’ll catch up later. Now at the end of the deferment, which is where we’re arriving right now, in many of these cases, we’ve got to figure out how to
get back on track. So one of the interesting things from a lot of clients that I speak to is they were offered these forbearance agreements or these deferments without an end game in place upfront, meaning the banksaid, yeah, you can take a year off of payments and we’ll just deal with it. You know, after that year and the deal with it after that year as the problem we have now, because one way to deal with it is a break from payments. And you saved up that money to give you a little bit of peace of mind and you can just pay them.
So if you’re behind $24,000, then you write a check for $24,000 right now and you’re back on track. That’s what the banks are anticipating you will do. If you are not able to do that, there are two other options, three other options, I guess you could refinance to another lender if that’s a possibility, given your credit and your equity, because you know the real estate market’s up right now. So, you could refinance to another lender. That’s not always possible, but it’s something you could try. Another option would be that you could ask for aloan modification. A loan modification is where the current lender, your current mortgage holder, restructures your loan and restarts your payments. So you go back to paying $2,000 per month and that’s actually one of the better options. The issue is just like a refinance. It’s not mandatory that the banks agreed to that.
So the banks will be reevaluating each homeowner’s financial circumstance to see if they are comfortable rewriting the loan. Because if they’re not comfortable giving you, getting you back on track, giving you, you know, in $2,000 a month payment back and just starting up again, then the other option is that the house willgo into foreclosure. So if you can’t pay the amounts current and the bank will not give you a loan modification to allow you to continue making payments again, you’re going to be facing foreclosure. And I think that’s, you know, that’s a very difficult prospect for a lot of people right now because the banks, the, the real estate value, especially in our area here in Eastern Pennsylvania, but I think it’s all across the country.The real estate values have gone through the roof. So the banks are feeling very comfortable right now that ifthey take houses to foreclosure sale that they’re going to get their money.
And, and that’s the interesting part because five or six or seven or eight years ago, banks would foreclose on a house and they might actually lose money. You know, if the house is worth $200,000 and the mortgage balance is $200,000 in a bank forecloses at a sheriff sale; they’re going to get a discounted price. So maybe, you know, the buyer at the sheriffs, they will get a $150,000 and the mortgage company will lose $50,000. In this market that’s not happening though, because everybody seems to have equity in their house. And that’s a result of the banks not having, not giving new loans over the last two years. You know, they haven’t been letting people take equity out of their house while the market has been so volatile. And all the numbers are up. So now pretty much everybody, I talked to has equity in their house. And there used to be a lot of folks that had little to no equity right now. Most people I meet with have plenty of equity, including you most likely and me as well. It’s great from that standpoint. So..
And I didn’t mean to interrupt you..
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Yeah. So, so the, with, with all of that equity, you know, there’s always a conversation about whether people could sell as a way out of this default as well. And you know, that’s one other option that I didn’t initially discuss a few minutes ago, but folks who have equity in their house can sell their house too. And they can cash out some of that money. The problem just becomes there’s nowhere else for them to go. So it’s not like they can sell high and make money and then buy another house cheaper because there just are no cheap houses anymore. The cost of living has increased so much, Katherine.
Yeah.
What kind of questions do you have? And you know, we’re thinking about this. Anything come to your mind as far as questions? It does that. Well, when you just said about the houses, can you hear me okay? Cause I want to, can you hear me okay?
I can.
Okay. I was just thinking about, yeah, you may be able to sell your home. And when you said there may not be a place to go, here in Charlotte, North Okay. I was just thinking about, yeah, you may be able to sell your home. And when you said there may not be a place to go, here in Charlotte, North Carolina, Carolina, yeah. I just saw one in my own neighborhood for $340,000. And that is maybe twice as much as houses were,valued just a few years ago, $340,000. So yeah, if you can get, if you can sell your house, that’s great. But where do you go? So of the three, options, refinance, refinancing loan modification, or to sell your home, youshare it with us, which probably will be the most likely for us, but don’t rule them out. But just, it sounds like If you’re thinking of selling your home and seeing, if you can get some of that equity cash, doing your homework on seeing where could you move, what would be, what would you need to do for the sale of your house to be the best option for you and with what Charles has shared with us, you can think about how your your credit is.
You gave really, really good information here. Thank you, Charles. There’s always a refinancing based on your credit. That’ll let you know what your options are, but at least, you know, that there are some options and something to think about. And Charles, I have to say people are, not all people, but it would be very rare that people got a year off on their mortgage and that $24,000, because that’s the number we’re using comes due and they have it and can write that one check. That would be some amazing discipline after like not having any breathing room, maybe being stressed over, you know, whatever bills to pay. And now you have this, thisfree money, as you said, and it didn’t come with instructions. I’m also seeing, I don’t know if this goes into your arena, but I’m also seeing people who have gotten the PPP loans that, they’re running into having that money due, or I think now, or coming soon, do you deal with any of that
Absolutely and I believe those, those folks who took the loans as early as they were offered, those loans are coming due in May. So we are about a month and a half away from those first set of loans coming due. You’re correct.
And those would be the, the EIDL small business administration loans that PPP loan money is also due. But fortunately, a lot of folks, a very high percentage of folks have been able to get those PPP loans forgiven. And you know, that was the design, right? The PPP loans were designed to be loans unless you took the money and then qualified for forgiveness. Fortunately, my business did receive a PPP loan, our law firm here that
were put through office, and we did qualify for the forgiveness about, over a year ago. So, if you qualify for forgiveness, great, if you can’t figure out how to do the paperwork, and that’s certainly something that a localattorney such as myself can help you with to see if we can get you qualified for that forgiveness. And, you know, otherwise we’ve got to come up with a repayment plan because some of those loans were high dollar amounts.
Humm. So let me ask, let me ask you this, and this, this might be a little gossip, but, how real is it that people are going to jail over this money?
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Oh, I think the answer is they are, it depends, I would say on the level of fraud. So, I’ve been reading a lot of articles and I’ve seen some instances where folks were applying for money for businesses that don’t exist. And I’ve actually had conversations with a lot of local people who had businesses that exsist, but they’re nervous about, you know, going to jail or being prosecuted for fraud. And, you know, my thought process is that, the, the real criminals are the ones who received money and received it fraudulently. I don’t believe that the government is going to go after people that received money legally, but then maybe didn’t use it exactly how they were supposed to. Because I think that, you know, there’s only a certain amount of resources that the government has to go after folks over these PPP loans.
And I think they’re going to start with the, you know, the people that received the most money first, you know, anybody that got over a half a million dollars or over a million dollars, because there were a lot of those companies, anybody that got that kind of money is going to be investigated. You know, there are a lot of folks that I meet with that got 20 or 30 or $40,000, and they did everything properly to receive the money. It wasn’t a fake corporation, they filled out the paperwork, honestly, and then they just weren’t able to repay it or to get that forgiveness. And I don’t think those people are going to be prosecuted for fraud, but I know that people just early on just made stuff up, submitted fraudulent applications. And I really think, you know, from a gossip standpoint, in my opinion, I really think the people that made fraudulent applications are the ones that are going to go to prison. Not the ones that are unable to repay or the ones that use the money in a manner in which it’s not forgivable.
Now, you know, still on the gossip tip, I’m thinking that if you had a fake corporation and you acquired this money, why wouldn’t you start a business like, why wouldn’t it like, why wouldn’t you actually do some stuff that would have you in business? Like, I don’t know. Anyway, you can say that.
That would’ve been a way to save yourself, but guess what “That’s hard work”. It’s much easier to just pretend and take the money and run.
As always, Thank you. Thank you for coming on the show. Thank you for being a thoughtful, caring attorney and thank you for having solutions so that people can live, live a free life, things we don’t know, we don’t know, but we feel intention. I’m sure if they’ve been listening to our conversations, they have felt a sense of relief so that they know that it’s not absolutely, you know, bad or negative. They can always come to you and get some answers to things that are on their mind. And while we were talking about, mortgage forbearance in the beginning of this conversation, you gave us a bonus with the PPP loans, that information. So thank you for all of that. I didn’t even expect that last piece. That was a bonus for me. You have one the things. Thank you until the next time Charles, have a super day.
Bye-bye.
