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What happens if I can’t pay my mortgage because of coronavirus?

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The pending coronavirus relief package will provide financial help for many Americans, including expanded unemployment benefits and stimulus checks.

But Americans like Paul Blank of Ridgewood are still worried about their bills.

Blank, a self-employed tech specialist servicing small computer networks, is afraid of missing a mortgage payment.

While he does a lot of work from home, “this pandemic has caused me almost entirely to stay home,” Blank said.

That means a lot of lost income.

When he contacted his mortgage lender — M&T Bank — to ask about a forbearance, which allows homeowners to defer mortgage payments without penalty, he was in for a surprise.

“I was flatly told that they would waive late payment penalties for 60 days, but the entire payment(s) would be due at the end of the 60 days,” Blank said. “When I mentioned changing the payment amount or loan length, they said, ‘we are not doing that.’”

Blank said he thought he’d be able to tack on the deferred payments at the end of his loan.

He decided not to take a deal for now because he said in the short-term, he can probably afford the payments.

“I was thinking that it would be good to preserve my savings until things are more back to normal to help out those family members who are worse off than I am,” he said. “And of course, the uncertainty about the future remains. My money will run out if this continues.”

It’s unclear if the stimulus package will streamline how forbearances work, but it’s expected to give lenders and borrowers more options.

If you’re afraid you won’t be able to pay your mortgage because of coronavirus, be proactive. Consider forbearance.

Here’s how it works.

WHAT IS FORBEARANCE?

Forbearance is the suspension of your mortgage payments. It’s not loan forgiveness, and you will eventually have to pay the skipped amounts back.

Right now banks and mortgage servicers are telling homeowners that they can suspend payments for three months, said Charles Richman, executive director of the New Jersey Housing and Mortgage Finance Agency (NJHMFA), which works with families on housing.

Both Fannie Mae and Freddie Mac loans will allow for 12 months of forbearance because of coronavirus.

Richman said while three months is standard, he thinks many banks will extend beyond that.

“There are people who are going to be out of work for more than three months,” he said. “At least here in New Jersey, the governor has suspended the ability to foreclose. It behooves the banks to work with homeowners to work out a plan of forbearance.”

SHOULD I GET A FORBEARANCE?

Before you examine your forbearance possibilities, you should take a hard look at your finances, including your income prospects and your available savings.

If you don’t need a forbearance to address cash flow issues, there is no point taking one, said Tendayi Kapfidze, chief economist for LendingTree.

“Your mortgage will continue to accrue interest while in forbearance,” he said. “This ultimately increases the total interest you pay over the life of the loan as interest is charged on higher amounts while in forbearance.”

“It’s not a costless option, so don’t do it if you don’t need to,” Kapfidze said.

HOW CAN I GET A FORBEARANCE?

To get a forbearance, you have to call your bank or mortgage servicer and ask for it.

The servicer will ask some questions to determine eligibility and may or may not request documentation, Kapfidze said.

“You may have to disclose all your income and assets,” he said. “If approved, the servicer will determine the length of forbearance and discuss the repayment terms with the borrower.”

WHAT ARE THE TERMS OF A FORBEARANCE?

Exactly what your forbearance will look like depends on your bank or mortgage servicer and what terms you both agree to.

It’s customary for the bank to expect a lump sum payment for your skipped payments at the end of the forbearance period, but there are other ways to do it, Richman said.

He said at the end of the period of forbearance, the lender will contact the homeowner to discuss what will happen moving forward.

“It could be a modification of the loan depending on the circumstances and why the person couldn’t pay. It could be a rate adjustment,” he said.

Another alternative is to spread the forbeared monies over the remaining length of the mortgage, which Richman said is the method that would have the least amount of impact on a homeowner.

It’s uncommon for a lender to agree to extend the period of the loan, allowing you to make the payments at the end of the original mortgage period.

It’s possible that legislators will establish requirements for lenders to follow for the payback methods, Richman said.

“We’re waiting for more federal guidance on this,” he said. “We’re still in this fog of war period.”

Before you come to an agreement with your lender, make sure you are comfortable with the repayment plan, and also ask about any late fees that could accrue.

WILL FORBEARANCE HURT MY CREDIT?

The experts we spoke to said because mortgage forbearance terms vary by lender, it’s possible that a forbearance could affect your credit. It really depends on whether your lender chooses to report it to the credit bureaus, so you should ask that question before you agree to a deal.

“Borrowers should be crystal clear with their lender about how their individual situation will be reported to credit bureaus so they know what to expect,” said Andy Taylor, general manager of Credit Karma Home.

Taylor said if it looks like you will probably be late or even miss a mortgage payment, a forbearance will help protect your credit.

“Late or missing payments will hit your credit harder than a forbearance would,” Taylor said. “Also, if you miss a payment, you may put your ability to take advantage of these programs at risk since a missed payment may disqualify you from many forbearance programs.”

ARE THERE OPTIONS OTHER THAN FORBEARANCE?

Before you enter a forbearance, see if you have other options to access cash.

Taylor said we headed into 2020 with record-high levels of home equity, so you might be able to find cash there.

One option is a cash-out refinance, which allows you to cash out the equity you’ve built in your home while hopefully locking in a lower interest rate, Taylor said.

Or you could apply for a home equity line of credit (HELOC), which is a revolving line of credit against the equity of your home. You can secure a HELOC now, even if you don’t plan to use it immediately, Taylor said.

“For any home equity option, you should act fast given demand,” Taylor said. “Consider starting with a local credit union or small mortgage broker who might be able to act faster.”

HOW CAN I GET HELP WITH FORBEARANCE?

The New Jersey Housing and Mortgage Finance Agency urges homeowners to contact a housing counseling agency.

You can find a listing of agencies, which will provide services and advice, for free, on the NJHMFA website.

“These counselors will walk a homeowner through exactly what they should be saying to the bank, what they should expect to hear from the bank, and what they should say to negotiate with the bank on forbearance,” Richman said. “These are people who are trained and certified by the federal government.”

The counseling is available statewide and can be done remotely.

There’s also assistance for renters. Services include help with financial literacy such as budgeting and credit repair, fair housing rights, eviction diversion and relocation assistance.

LendingTree also offers these helpful guides on what to do if you can’t pay your mortgage.

Tell us your coronavirus stories, whether it’s a news tip, a topic you want us to cover, or a personal story you want to share.

If you would like updates on New Jersey-specific coronavirus news, subscribe to our Coronavirus in N.J. newsletter.

Sign up for text message alerts from NJ.com on coronavirus in New Jersey:

Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com. Stay informed and sign up for NJMoneyHelp.com’s weekly e-newsletter.



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California’s vague new financial regulation law – Orange County Register

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Assembly Bill 1864 didn’t get much media or public attention as it zipped through both houses of the Legislature on the last day of the 2020 session.

Superficially, it appeared merely to reconfigure the state’s financial regulatory agencies into a new entity called the Department of Financial Protection and Innovation.

However, those in California’s vast financial industry were paying lots of attention because the bill creates an entirely new regulatory regime with broad powers, including fines of up to $1 million a day, to police financial players that hitherto have had little oversight.

The official rationale for the legislation is that President Donald Trump’s administration neutered the federal Dodd-Frank Wall Street Consumer Financial Protection Act of 2010, so the state must step in with an equivalent to guard against predatory financial practices that harm consumers.

The new California Consumer Financial Protection Law gives the reconstituted agency authority to go after “abusive practices” whose definition in the law is fairly vague. Thus, the agency itself will define the term as it also decides which businesses will face its scrutiny.

It appears that the new law will affect firms involved in debt settlement, credit repair, check cashing, rent-to-own contracts, payday lending, student loan servicing and financing for retail sales. However, its primary target seems to be financial services offered by non-banks, particularly what are called “fintech companies” that offer bank-like services via the Internet without maintaining physical offices.

Fintechs, many of them based in the San Francisco Bay Area, have blossomed in recent years as part of the digital economy, competing with traditional brick-and-mortar banks. Their disruptive nature is not unlike the challenge that technology-based ride services such as Uber and Lyft pose to taxicabs and buses.

Late-blooming changes in AB 1864 exempted traditional financial firms that are already regulated, such as banks and credit unions, from the new consumer protection law, leading some analysts to conclude that its unstated aim is to help them stave off competition from new kids on the financial block.

The vagueness of the new law was encapsulated in what Gov. Gavin Newsom said during a signing ceremony. The new law and the new department, he said, will “create conditions for innovation to flourish in a way where we can steward that and we can just work against its excesses. So we support risk-taking, not recklessness.”

Newsom also signed two other financial protection measures, one that requires debt collectors to be licensed beginning in 2022 and the other creating a Student Loan Borrower Bill of Rights.

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Erie Homecoming 2020 to take place virtually

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Erie Homecoming 2020: “Erie’s Economic Evolution” is happening this week.

Erie Homecoming is an event that shares the vision of where we are going as a business community and the specific projects that will be taking us there.

Yoselin Person was live outside of the Erie Regional Chamber to tell us more about what’s taking place at this year’s homecoming.

Get your favorite hot drink because Erie Homecoming is happening virtually. 

Rooms full of people just aren’t happening in the midst of a pandemic, so Erie Homecoming is an event that will inspire you from comfort of your home or office.

The purpose of homecoming is to give attendees the opportunity to learn how they can invest in the Erie community.

During this two day event, you will be able to learn how you can invest the time, talent and treasure in creating a more diverse and prosperous Erie community.

Erie’s Black Wall Street will be featured this year. It’s a nonprofit organization that’s known for improving black business.

“So, having it geared towards helping black businesses expand and spread their wings, I think that’s amazing,” said Alexandria Ellis, owner, She Vintage.

Ellis began her business six months ago. She says Erie Black Wall Street is a safe space where black entrepreneurs can connect and collaborate with others.

The organization also helps others with credit repair.

“They’ve helped me by connecting me with resources if someone is looking for a nail tech or a boutique that’s black owned, they have connected customers of their clients to me through their organization,” said Ellis.

Speakers from the black owned organization will speak about creating regional equity.

There will also be a discussion about Flagship Opportunity Zones and what it means in terms of tax and other investment incentives.

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RiverBend Growth Association announces new members | Business

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RiverBend Growth Association encourages use of face coverings

The RiverBend Growth Association announces its new members:

5 Diamond Campground

Brian Campbell and Matt Diamond

2 Fun Lane

Hartford IL 62048

(618) 254-1180

facebook.com/5-Diamond-Campground-103976501423687

Alton Pride Inc.

Jason Heeren, director of sponsorship

P.O. Box 662

Alton IL 62002

(618) 204-7420

https://altonpride.com

Alton Pride is a charitable and educational organization established to bring awareness, understanding, and advocacy to the LGBTQ+ community with an emphasis on the specific needs of the youth within the community. We are setting ourselves apart from other Pride organizations by focusing on giving back to our community, rather than hosting just a parade or festival. We will be depositing a majority of event proceeds into a structured account funding our goal to develop a local teen suicide prevention line and a teen resource center to help youth in need.

 

Imo’s Pizza – Bethalto

Lori Bromberg, president/treasurer and managing partner

515 N. Bellwood

Bethalto IL 62010

(618) 258-0011

www.imospizza.com

Bethalto Imo’s is owned by Charles and Barbara (Babs) Pelan. Barbara was a nurse and Charles has had a varied career but has always had an entrepreneurial spirit. He and Babs purchased the Bethalto Imo’s in 2013 and seeing the success of the brand and the store in Bethalto were anxious to purchase the Edwardsville Imo’s franchise in 2014.

Their daughter, Lori Bromberg, is the managing partner and provides leadership and daily oversight to the business. Lori has a bachelor of science degree in management and has 31-plus years in corporate leadership roles, including customer experience, supply chain, distribution strategy, change management, hr/talent management, training and safety. Lori also is a certified mentor for SCORE providing mentoring and coaching to small businesses.

While it is our goal to have a financially successful business, we believe the cornerstones to achieving success is ensuring a superior product and customer experience, investment in our employees, positive contributions to our community, while demonstrating a strong commitment to safety. We pride ourselves on our commitment to Imo’s corporate mission, “To maintain the Imo’s tradition of uncompromising quality, pride in Imo’s products, and passion for success and for customers to experience a genuine, original St. Louis pizza of the highest quality, served in a pleasant atmosphere or at home, so that they too will have reason to say: “Imo’s is my favorite pizza.”

If you frequent our Bethalto location, we will be moving down the street a little over a mile, still on 111, within the next month or so.  We will continue to have delivery and pick-up as well as offer new patio seating.

 

Lewis and Clark Community College Foundation Inc.

Mark Kratschmer, president

5800 Godfrey Road, ER 0210

Godfrey IL 62035

(618) 468-2010

www.lc.edu/About_the_Foundation/

The Lewis and Clark Community College Foundation is a nonprofit corporation organized under the laws of the state of Illinois. The foundation supports Lewis and Clark Community College and its students through scholarships, awards, and other assistance.

Piasa Body Art

Cody Hinkle, owner

560 E. Broadway

Alton IL 62002

(618) 462-1720

Alton’s best body art shop, offering tattoos and piercing services. Now with The Salon for all your hair care and barbering needs!

Prosper Credit Consultants

Jerheart Huntley, owner

525 Wyss Ave.

Alton IL 62002

(877) 503-7465

prospercreditconsultants.com

Credit repair that works! Prosper Credit Consultants uses the most innovative processes to make sure our clients are educated on how credit repair works! Prosper Credit Consultants is dedicated to educating our clients on how to get and keep good credit! We have become a one-stop shop for all things from credit repair, building credit for beginners, trade lines, putting our clients in position to purchase that new car, and home they want. Give us a call (877) 503-7465 or set up a free credit consultation.

The RiverBend Growth Association is the chamber of commerce and economic development organization for the 12 communities known as the Riverbend.  For more information about the Growth Association, visit www.growthassociation.com or call (618) 467-2280.

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