If you've lost your job in pandemic, mortgage help is available

For most homeowners their mortgage is their single biggest monthly expense. So when you lose your job, even temporarily, it suddenly becomes your single biggest worry. That's happening to thousands of Minnesotans and millions of Americans.

One of those Minnesotans is Mike Hornung, of Anoka, who was furloughed March 20. He was stunned by what he was initially told by his bank when he called to explore his options.

"Initially, we got a response saying they would do a six-month forbearance, but then at the end of the six months they would expect a lump sum payment," he told 5 EYEWITNESS NEWS. Obviously, six months with no mortgage payments would be great. A requirement to make all six payments at once after six months is obviously not great.

Fortunately, Hornung got a call back from his bank.

"And they said, no, they weren't going to do lump-sum payment due at the end of the term, but they weren't sure what they were going to do," he said. "They didn't really have a response about what they were going to do, which again, kind of leaves you uneasy."

That was last week and Hornung still doesn't have an answer other than knowing he doesn't have to make payments for six months. He's hoping it will just be added on to the end of his mortgage term.

In fact, that seems to be the goal of a mortgage protection provision in the CARES Act passed by Congress in March. Its two main provisions were that no foreclosure proceedings could begin until after mid-May. The other is that you have a right to ask for a mortgage for up to six months with the possibility of getting an extension for another six months.

The problem is the legislation doesn't specifically say lenders can't require a "balloon" payment at the end of the forbearance. However, after the Federal Housing Finance Agency urged all lenders to not require lump-sum payments, most are following that guidance. The legislation does say lenders can't add penalties or additional fees and interest above whatever you've already agreed to.

All of this is good news to Mike Hornung who feared a lump-sum payment could turn his mortgage lifeline into a concrete block that could sink him. So far, 3.5 million mortgages are in forbearance, or 6.5% of all mortgages in America, according to a report by Forbes Magazine.