Banks criticized for requiring balloon payments on loans in forbearance
From the American Banker:
Big banks that have been offering mortgage relief to homeowners during the pandemic are facing fresh criticism over the rules they are enforcing when borrowers are supposed to resume making their monthly payments.
A report published Tuesday found that banks are handling the question of how borrowers should compensate for their missed payments in myriad ways. Some homeowners are having those payments tacked onto the end of their loan terms, while others are being offered loan modifications, and still others are being told that they owe the money in an upfront lump-sum payment that may be unaffordable.
The outcome can depend on a dizzying array of factors, including whether the mortgage is backed by the U.S. government, which options that bank offers, whether the borrower is aware of all of those choices, and the borrower’s financial wherewithal.