There appears to be some confusion regarding the laws on deferring mortgage payments. In this blog post, I’ll do my best to clarify the rules as I understand them.

Deferring Mortgage Payments – What you need to know

If you hold a federally backed mortgage on your downtown Boston condo (keep reading to find out if your loan is), the CARES act allows you to defer payments for an initial 180-day period. You may request an extension for another 180-day period after that. The law also prevents mortgage servicers from charging additional fees, penalties or additional interest (beyond scheduled amounts) when payments are deferred.

Accoring to Forbes Private banks and mortgage lenders (Wells Fargo, Chase, Guild, etc.) are making some adjustments for their customers without federally backed mortgages, such as waiving late payment fees, but most are stopping short of saying that they’ll defer payments at this time. However, federal financial regulators are encouraging lenders to work with their borrowers, and the sooner that impacted borrowers contact their lender to let them know they can’t make payments, the better.

With both federally backed and private mortgages, one risk is that the deferred payments will all be due at once when the deferment period ends. Be sure you understand when and how missed payments need to be made up with your lender. Some lenders are allowing the missed payments to be added at the end of the loan, but others will expect a balloon payment as soon as regular payments resume.

Finally, when you and your lender come up with a payment plan that works for you, be sure to get it in writing. Ask your loan servicer to provide written documentation that confirms the details of your agreement so that both parties are clear on what the terms are.

I hope the above information helps.

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