Many Boston homeowners who have been impacted by the coronavirus crisis may soon receive some relief on their mortgage payments.
The City has partnered with 12 of the largest housing lenders in Boston, all of whom will grant clients the opportunity to defer their mortgage payments for at least the next three months. The payment relief is an effort to keep Bostonians safe in their homes without fear of foreclosures.
Maureen Flynn, deputy director of the City’s Boston Home Center, said those eligible for mortgage deferrals would be residents who have lost their jobs or fallen ill during the crisis, but had otherwise been making previous mortgage payments without fail. If you too are considering to take a mortgage loan, you might want to visit this mortgage broker Red Deer and ask for a consultation.
Eligible homeowners can contact their lender, who, if participating, will work with them to create a deferment plan if they demonstrate that they have indeed been impacted by the coronavirus epidemic.
The process for applying for a deferral is made to be simple for those struggling in the crisis, Flynn said. Citizens Bank, for example, would forgo asking for information like tax returns because it would already have those on file.
“I know that [the banks] promised us and committed to us that they would make it easy,” Flynn said. “Normally, banks and even [the Department of Neighborhood Development], ask for things a million times [more than necessary], even though we might have it.”
Boston’s system of mortgage payment deferrals will differ from some other loan systems in that it will not require homeowners to pay back their deferred payments in one lump sum. Instead, they will work out with lenders a feasible repayment plan.
The partnership also details that a bank cannot charge late fees on any deferred payments during the agreed-upon period.
“The really good thing about this plan that we got the lenders to agree to is that homeowners’ mortgage payment will not change,” Flynn said. “So at the end of the deferment period, they’re going to owe exactly what they owed when they were paying all along.”
There are several ways a borrower can pay back their loan deferments.
One way is for a homeowner to extend the length of their mortgage term so that if they accept a three-month deferment, they would ultimately be paying back their loan for three months longer.
Another method is by way of a balloon payment, in which a homeowner repays the deferred payments at the conclusion of their mortgage term.
Still, Flynn said banks can choose to work out a different method that works uniquely with their customers, as long as they abide by the aforementioned restrictions.
Flynn said the Boston Home Center often works with homeowners whose homes are at risk of being foreclosed.
“We said we need to figure out a plan for homeowners to reassure them that they are not going to lose their home because of this pandemic,” Flynn said. “We wanted everyone to stay where they are and to be reassured that they could stay in their home if they owned it.”
The partnership between lenders and the governor quickly came to fruition, Flynn said. Many banks were willing to be flexible and hopped on board within about 48 hours of the City reaching out.
“We don’t even regulate them, so we were asking them to participate in a plan that was completely voluntary,” Flynn said. “We were really thrilled that … a lot of them came on board right away.”
Kerry O’Brien, deputy director at the Department of Neighborhood Development, said the motivation for this partnership could have been an already established relationship between these banks and the City.
“It was a major effort by the mayor and the Home Center to cultivate these relationships over the years,” O’Brien said. “There’s a lot of history here.”
Flynn added that the banks’ cooperation also stemmed from their understanding that maintaining public health has forced many people into tough situations. To provide reassurance to homeowners, Flynn said, was evidently the right route to take at this moment.
“On the other hand, on the good side, the banks still have a customer at the end of this and they won’t be foreclosing on the homeowner and incur all those costs that come with a foreclosure,” Flynn said.
Banks will probably feel the brunt of deferred mortgage payments, but the cost of pursuing a foreclosure would most likely outweigh the costs of participating in the deferral plan, according to Flynn.
The plan has been catching the attention of other municipalities, Flynn said, despite it having been rolled out less than a week ago.
“We’ve gotten requests from other cities,” Flynn said. “They’re interested in the plan, so we think it’s a good one.”
Boston Home Center encourages more lenders to join in on the relief partnership in an effort to cover a wider range of homeowners. Meanwhile, Flynn said any homeowner currently undergoing financial distress should immediately call their lender.
“If you have a problem getting through or something goes wrong, you can always call the Boston Home Center and we’ll help you,” Flynn said.
Meanwhile, O’Brien said she remains hopeful for a gradual recovery despite recent circumstances.
“I think Boston works really well together because we are a city of strong people that like to work in unity,” O’Brien said, “especially when something’s going on.”
