Real Estate Articles

How homeowners can protect their investment

The impact of COVID-19 was swift and unexpected, leaving many people in a financial emergency. In fact, a study conducted by OnePoll in conjunction with the National Association of Realtors discovered a surprising 71 percent of homeowners worry they will not qualify for any mortgage relief options that are out there.

While mortgage relief options are available, 57 percent are skeptical about the mortgage relief selections that are offered. Furthermore, nearly three out of four people say they do not fully understand the effects or ramifications of the various mortgage relief options available.

"The effects of COVID-19 have led to some homeowners taking desperate measures to ensure they can protect their investments. The reality is there are relief options available that most homeowners are unaware of, and the sooner the homeowner can speak to a lender or their Realtor about alternative payment plans, the less stressful the financial situation will be," says Mary Kay Groth, president of the Silicon Valley Association of Realtors.

Here are some areas that can be addressed when speaking to a Realtor or lender about your financial situation and protecting your investment:

• Repayment Plan. If you cannot afford reinstatement, but can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.
   
• Loan Modification. Your lender may agree to amend your mortgage. The options include:
  • Adding all the missed payments to the loan amount and increasing the monthly payment to cover the larger loan.
     
  • Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan to lower your monthly payment.
     
  • Switching from an adjustable rate mortgage to a fixed rate mortgage, so you are not exposed to increases in your monthly payment.
     
  • Requiring amounts for taxes and insurance to be included with your monthly mortgage payment, so you avoid big bills in addition to your mortgage.
     
• Other options with lender. Talking to the lender or loan servicer that collects the payments should be one of your first steps. Other options to discuss include:
  • Forbearance. Lenders may let you make a partial payment or skip payments. You will have to repay any missed or reduced payments in the future. Forbearance does not erase what you owe.
     
  • Reinstatement. Reinstatement refers to making a payment that covers all your late payments, usually at the end of a forbearance period.

Groth says homeowners who are struggling or unable to meet their loan obligations, can work with their Realtor and lender to find a solution now. "Do not wait until you fall behind to seek help. Acting quickly may help you keep your home and the money you have already invested into it," says Groth.

Groth adds, "Many property owners are falling behind on their mortgage payments, especially mom and pop landlords who are renting their property and whose renter is unable to make payments because of the pandemic. A Realtor can recommend responsible lenders that can offer them and other struggling homeowners viable options."

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please email or call the SILVAR office at (408) 200-0100.

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