How to talk to your lender
What you say to make sure you get help
Banks, credit card issuers and other lenders have promised to help those impacted by the coronavirus. It’s not automatic, though; you have to seek out the help. Here are a few things to ask:
1 Do I qualify? Check the lender’s website to see what kinds of help are available and how to apply. Generally, you’ll want to confirm the details on the phone or by email, including the steps to apply, said Lauren Saunders, associate director of the National Consumer Law Center.
She advises keeping a record of the conversation and what you were told. You can take written notes of phone calls, including the time, date and name of the company representative, or take screenshots of electronic communications.
“Some people assume that (a hardship program) will automatically kick in if they just miss a payment, which is very dangerous to assume,” says Bruce McClary, a spokesman for the National Foundation for Credit Counseling.
Skipped payments can lead to credit score damage and collection calls, and could limit your options later.
2 How does it work? Companies take different approaches: one lender may allow you to skip payments but charge you late fees; another may waive the fees but report skipped payments to the credit bureaus. Some will expect you to make a lump sum payment of the amount you skipped.
“This is not free money,” Saunders says. “It’s just putting off a debt that you’ll have to repay along with your other debts later.”
Even after your financial hardship is over, you may not be able to cough up several months’ worth of payments at once, McClary notes.
Ask if the payments can be tacked on to the end of the loan or paid off over time. Also request that the account be reported “paid as agreed” to the credit bureaus to avoid damage to your credit scores.
3 How long? A hardship program may last three to six months, but you may have the option to extend the relief if you ask.
Lenders may not make that clear, however. Some borrowers who asked for mortgage forbearance in recent days were told they would owe a lump sum after three months, with no mention of the potential extensions.
These rules apply only to mortgages backed by federal entities, including Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the Veterans Administration (VA), the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA). But most mortgage lenders have some type of hardship program or loan modification options.
This article was provided to The Associated Press by the personal finance website NerdWallet. Want to suggest a personal finance topic that Quick Fix can address? Email apmoney@ap.org.