The Trump administration is considering implementing a plan in conjunction with mortgage lenders and real estate trade groups that allows homeowners whose income has been cut by coronavirus to delay their mortgage payments, according to a report Tuesday by Bloomberg. The administration did not suggest how borrowers might catch up on payments, however.
“Tens of billions” of dollars in short-term financing will need to be advanced to mortgage servicers by the government, Michael Fratantoni, chief economist at the Mortgage Bankers Association, told Bloomberg.
The move would not be unprecedented, and a proposal may follow guidelines created from forbearance
programs in the wake of areas hit by severe storms or other natural disasters. On March 10, Italy suspended mortgage payments, so the U.S. could theoretically take tips from their plan as well.
Vince Malta, president of the National Association of Realtors (NAR), suggested that the move would not only help the economy, but could help slow the spread of coronavirus by preventing others from taking on side jobs in order to help make payments.
“This problem will drain household resources, weigh on the economy, and could undermine efforts to slow the spread of Covid-19 by encouraging people to take on extra work,” Malta said.
Malta also noted that whatever plan is put in place would likely need to be the same across all mortgage servicers, whether loan terms are stretched out, borrowers have balloon payments, or another option.
Such a move by the White House “makes perfect sense” during this time of uncertainty, NAR Chief Economist Lawrence Yun said.