Here in South Texas, thousands have been affected by Hurricane Harvey. In response, many mortgage servicing companies have notified families that they will defer payments until October, November, even December. Often these notices state that late fees will not be charged and that interest will not compound during this deferral. But, it is crucial that homeowners remember that deferral IS NOT forgiveness.
These notices are not the result of action by Congress. The law has not given everyone in South Texas a pass. Even though these notices make reference to determinations made by FEMA or by the IRS as to who is affected, these notices do NOT carry the authority of either of those agencies. Do not be confused, you must still pay your mortgage payments, sooner or later.
While practically speaking, waiting for FEMA claims, or if you were lucky enough to have flood insurance, waiting for insurance adjusters and pay outs, is uncomfortable, going out and buying new things, rebuilding out of your own pocket, is not a safe way to protect your home until and unless your are certain that money is coming to cover your losses.
Several years ago, the government mandated certain procedures be put in place to implement home refinance programs and insure that every eligible person would be offered the chance to re-finance under government “Home Affordable” programs. As a result thousands of Texans were told that their mortgages would be considered for refinance and they were sent a dizzying array of forms. In the end, much fewer people were actually approved than were lead through the approval process. In a stunning display of legalism over compassion, the Fifth Circuit Court of Appeals held that mortgages are mortgages and that no matter what sort of non-binding discussions are going on, the law still applies and people should have known that mortgages have to be paid. Without a specific Act of Congress controlling “deferred” payments, there is no reason to believe that homeowners will not get caught short again.
This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.