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The U.S. government recently announced the distribution of stimulus cash to tens of millions of bank accounts following multiple lay-offs and business closures. The global pandemic COVID-19 has led to strict lockdown procedures that forced the economy to stop. 

Despite numerous assurances from economists claiming paychecks won't get slimmer, and the recession won't have a tremendous impact, many people will still have a hard time recovering. 

Thousands of homeowners who lost their jobs due to the coronavirus isolation measures are now scrambling to seek some sort of mortgage relief to avoid losing their homes. 

Mark Zandy, Moody's chief economist, said the recession would likely last until the end of July. He also said recovery would be slow until researchers release a vaccine or cure for the virus. Home foreclosures are also expected to increase. Zandy, however, does not expect it to be as devastating as the 2008 recession. 

"I expect some two million people to lose their homes in this crisis," he said. 

Relief

Experts say policymakers should provide financial relief to mortgage servicers during the crisis. In a recent survey conducted by the Mortgage Bankers Association, more than 4% of all mortgage borrowers have stopped paying following the COVID-19 shelter-in-place orders. 

The number of home loans past due rose to 3.7% in the first week of April from 2.7% the week before. More than 2 million American homeowners missed a mortgage payment recently, according to banking data. 

Roughly 17 million Americans filed for unemployment benefits in the past month, with more expected to come should the lockdown measures extend. The Trump administration required lenders to give borrowers grace periods as long as half a year without any penalties.   

Under the new law passed in late March, homeowners may ask their loan servicers to reduce or suspend their mortgages for up to a year without any fees or penalties. The law also covers Single-family homeowners and condominium owners. 

Loans backed by U.S. affairs departments may also be eligible for the provision.

Mortgage Services

Financial experts believe lawmakers should also create a new provision for mortgage servicing companies amid the declining economy. They said the administration should figure out a way to advance payments to investors even if homeowners do not make a payment. 

Refusing to give the company relief could lead to closures. Failure to survive could make a mess in mortgage servicing, which will equally affect homeowners trying to receiving forbearance. 

Many lenders and mortgage servicers offer relief programs during the lockdown. However, some programs will end up tripping consumers down the line. 

While lenders will let homeowners avail of a forbearance agreement, their debts won't be forgiven, and their interests will keep building. In some cases, consumers were told they would be obligated to pay in a lump sum after three months. 

Before signing any agreement, it is advised to research everything you were told. Consumers can also complain about servicers or lenders at www.consumerfinance.gov.

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