*Bonus* CARES Act Home Loan Forbearance Protection Breakdown and Deadlines

*Bonus* CARES Act Home Loan Forbearance Protection Breakdown and Deadlines

Tanner Iskra: First of all, how does a Medical 
Corps Service Officer, someone who’s commanded   medical troops at every level- platoon, 
brigade- in combat, how do you- how did   you get into the current business that you're in 
as the director of the Servicemember Affairs here   at the Consumer Financial Protection Bureau?
Jim Rice: Well, as you mentioned, I served,   I was fortunate enough to serve for three 
years- a little over three years as an   Army Medical Service Corps Officer and then was 
fortunate enough to lead in a variety of levels.   At every one of those levels, a number 
of soldiers in each of those commands   would have financial challenges. Either 
they would, or their family members.   And in the Office of Servicemember Affairs, 
we are responsible for developing and   implementing initiatives that help to educate 
and empower service members and their families   to make better informed decisions regarding 
consumer financial products and services.

  Iskra: Yeah.
Rice: So, I think   what I bring is that- that experience of more 
than 30 years in the Army Medical Department,   but the Army, Navy, Air Force, and Marine 
Corps- those soldiers, sailors, and airmen   and their families have similar challenges. So, 
I think I bring that experience, that background   as a veteran and help develop those tools.
Iskra: Sure. I guess less of a- as much of a,   you know, I guess I'm- what I'm more interested 
is: what was the process of getting there?   How did that transition happen for you?
Rice: It actually wasn't a direct transition   from when I retired from the military.

spent about six years at the Department   of Health and Human Services. So, you may see 
that as more of a more natural transition.
  Iskra: Yeah.
Rice: I worked in the Office   of Medicare Hearings and Appeals in a variety 
of administrative positions there. And I was   interested- I've been interested in coming to the 
Bureau for a long time. I think that skillset that   I bring as a veteran and as a leader through 
the Service and understanding those challenges,   I think it's a natural fit and helping to 
address those issues that are so important   to service members and their families.
Iskra: Gotcha. Yeah. One thing I was talking   about here on Borne the Battle is that military 
transition and just how people get from leaving   service to the current position that they're 

So, just curious about that, just seeing how   that went. That's very good. Very good. 
And Mark, you're the assistant director   for the Office of Mortgage Markets for CFPB, and 
you've had extensive- from what I read in your   bio- you've had extensive experience in relief 
programs like the Department of Treasury’s, their   Troubled Asset Relief Program, TARP. You were the 
Home Ownership Preservation Officer, director of   the Hardest Hit Fund, and others. Like I said 
in the opening that you're not going to hear,   that I actually said in the opening monologue, it 
seems like this is the team between you and Jim,   that, you know, you're the team that's going 
to handle something like Homeowner Protection   and support of a hundred year pandemic. 
How did those roles, how did those earlier   roles prepare you for executing the Forbearance 
Protection that's provided in the CARES Act?
  Mark McArdle: Well, at Treasury, when we were 
running the Home Ownership Preservation Office,   we were facing a historic housing crisis.

were underwater on their homes. They owed more   than the house was worth. There were millions of 
borrowers having trouble paying their mortgage.   The TARP Program created programs like the 
Home Affordable Modification Program and other   programs to help folks, you know, stay in their 
homes during that crisis. And that, we thought,   was going to be a once in a lifetime crisis.
Here we are, again, with another pandemic related,   you know, a crisis that's driving folks to 
have some issues paying the mortgage. So,   I believe that experience helped shape and prepare 
me for this one. So, I think we are in a better   place. You know, a lot of homeowners are in a 
better place than they were in 2008. We don't have   the same types of loans out there. Folks have more 
equity in their homes.

So, we're, in many ways,   in a better position than we were back then.
Iskra: Well, that's good to hear. Well, I really   appreciate both of you for coming on and frankly, 
you know, being introduced to someone within   the Consumer Financial Protection Bureau who can 
talk about these forbearances and how they affect   government backed loans like VA loans. I knew- 
personally, I knew forbearance was an option,   but I didn't- I honestly knew nothing about 
it. And when I reached out to the VA loan team,   because I wanted someone to come on and talk about 
Earls because rates are at historic lows, and   I know many veteran homeowners are getting 
spammed with all kinds of offers about Earls.   So, I wanted to go through that- wink, 
wink, VA loan guarantee service, hit me up-   but they kind of threw me another subject, 
which is quite frankly your office and   forbearances right now.

It’s a little late to 
talk about, but we're not too late, right?
  McArdle: No, there's still time for folks to enter 
into forbearance. And many folks are, if they have   had financial difficulties related to COVID-19, 
there's lots of options available for them.
  Iskra: They were, you know, first of all, like me, 
for those that heard it in the news and were like,   “Cool, but I don't know what that word is, 
and I'm not going to learn it ‘cause I'm   not really in that position right now.” You 
know, some of those are now having to do-   due to updated circumstances in their lives, 
they're having to understand- they're having to-   have to understand forbearances.

Can you either- 
can you define either what a forbearance is?   It's not forgiveness, right?
McArdle: That's correct. A forbearance   is when your mortgage servicer or lender allows 
you to pause or suspend or perhaps reduce your   mortgage payments for a limited period of time 
while you were getting your financial footing.   So, you don't have to make payments for a 
period of time, but eventually at some point   in the course of your mortgage, you will 
have to pay the missed payments back.
  Iskra: Tracking. Okay. Now, do you have to pay 
it all at the end of the forbearance period?
  McArdle: if you have the federally backed loan and 
even if you don't, most servicers and lenders have   options that you can delay or defer the payments 
until the end of the mortgage, for example,   or you can, there are options around modifications 
and other things. So, you do not, in most cases,   ever have to pay the loan, the missed payments 
back all at once when your forbearance ends.
  Iskra: Okay.

Is that somewhere in the 
CARES Act law that they don't have to-   that they're not going to ask for a lump sum?
McArdle: It is for federally backed loans.   Most of the agencies involved, including 
VA, have issued guidance to that effect.
  Iskra: When you guys talk about federally backed 
loans, like I know VA loan, FHA loans ‘cause some   veterans may not have the VA loan, maybe they 
have another federally backed loan. What are all   the federally backed loans that this covers?
McArdle: So, this covers VA loans, GSE loan,   which is either Fannie Mae or Freddie Mac, tax 
your loan, which is about half of all mortgages,   FHA, the Federal Housing Administration, and USDA. 
Those five agencies together compromise a little   bit more than 70% of all mortgages out there.
Iskra: Very good. Very good. Yeah, we were   talking about not having to pay it all back in 
one lump sum. But since you're carrying over   a larger overall balance for longer, will that 
affect the overall balance due to the interest?
  McArdle: So, no, in most cases, you just pay the 
missed payments that you would have paid anyway,   including the interest you 
would have paid at the end.
  Iskra: Okay.

McArdle: So, there was no added interest   or penalties or fees. It is just the payments 
you would have made, you make at a later time.
  Iskra: Gotcha.
McArdle: One piece of advice I'd give folks is:   make sure you talk to a lender both before you get 
in there, and then when you start the forbearance,   it's important to keep in touch with your lender.
Iskra: When we were talking about, when we're   talking about the lender, we're talking about like 
that's Navy Fed or your bank. It's not VA or CFPB   or USDA, right? We're talking about the lenders.
McArdle: Correct. The person you pay your mortgage   payments to every month.
Iskra: Yup. Yep.   Now, you have a right to request a forbearance for 
180 days, right? With an extension for 180 days?
  McArdle: That's correct.

The CARES Act 
requires that all federally backed loans offer   forebearance period of up to 180 days. 
And then at the borrower's request,   and only upon the borrower's request, they 
can be eligible for another 180 days. So,   that's a total of a year's worth of forbearance.
Iskra: Wow. Now, this podcast is dropping in   January. Is that too late in the game 
to request either of these for any   federally backed loan except for VA loans?
McArdle: So, some of the other agencies have   deadlines. The FHA and USDA have deadlines of 
December 31st, but they are working actively   to extend that deadline right now.

VA does 
not have a- their deadline is April 1st.
  Iskra: Okay. So, if you've got a VA loan, 
you got until April 1st to request a   forbearance for 180 days.
McArdle: Correct.
  Iskra: And that's for the initial 
time, not for just the extension?
  McArdle: Correct.
Iskra: Okay, great. So, I'll just-   and I'm getting this information from one of your 
videos that I saw online on YouTube, which was   very well produced, by the way. No fees, no 
interest added to your account. Does that mean no   penalty interest, right? So, like regular interest 
accrues, so much of the federal student loan   deferment where you can, you can stop payment, 
but the loan, you- the longer you defer, the more   interest you accrue or how does that work?
McArdle: No.

So, just the payments you miss   you will pay back the regularly scheduled 
interest. There is no added interest.   It doesn't, you know, so yes, your balance will 
go up by the amount, the payments you missed,   but there's no added payments missed. It's 
just the payments you would have made before.
  Iskra: Okay. So, sometimes your monthly payment 
might go up ‘cause you're paying, you're trying   to pay back that that 180 days or a year's worth 
or you can pay it at the end.

It just depends on   the loan, right? It just depends on the lender.
McArdle: At the end of your loan, you should talk   to your servicer or the person you pay 
your mortgage to, and they're going to   walk you through options. And you could, if you 
wanted to, pay it all back at once, but that's   never required. You could do a repayment plan 
where you pay it back over a period of time.   There'll be options where you can do what 
they call, for a VA loan, a partial claim,   where the missed payments are moved to the end of 
the mortgage, and you don't have to pay that back   until you refinance or sell your home.

Army Medical Service Corps

Iskra: Wow.
  McArdle: And then there'll be modification 
options, which can do things like extend   your term, and that's another way to pay for 
the missed payments. And your servicer will   walk you through each of these options 
when you are ready to exit forbearance.
  Rice: And that's why it's important. Going 
back to Mark's earlier point that the   veteran keeps up with their servicer along 
the way to ensure that they're getting the   best option that works for them.
Iskra: Very good. Very good. Now,   talking about applying for forbearance, 
other than stating that, “hey, COVID has   put me in a spot,” you're not really required 
anything more to provide your lender, right?
  McArdle: Correct. Yeah. Correct. There’s no added 
documentation, your servicer. You would just have   to say your hardship is related to COVID-19, 
and that's all that's required to enter into   a COVID-19 forbearance with the federally 
backed agencies.

And they should not be   asking you for additional documentation.
Iskra: Have you heard of any instances   where banks have asked for additional 
documentation, and you guys have had to   step in, or someone's had to step in?
McArdle: So, if you run into that,   we encourage your listeners to- there's a 
complaint line on consumerfinance.gov/housing,   and you can submit a complaint about 
your servicer, and that's something we   will look into. So, we track and list- follow 
those complaints very closely. So, if you're   having a hard time with your servicer, please, 
we encourage you to visit that website, submit a   complaint.

It's a very easy form to fill out.
Iskra: Gotcha. Very good. Very good. Is there   anything else that veterans should be 
aware of while they're in forbearance?
  McArdle: So, it's a good idea to monitor your 
credit while you're in forbearance to make sure   nothing else is going on. It's also a very good 
idea to keep track of the time. So, when you're   getting close to six months, you'll have to 
reach out to- if your servicer hasn’t reached   out to you, you should reach out to your servicer 
because that second 180 days if you need it is not   automatic. You have to request an extension. And 
you could drop out of forbearance if you don't   talk to your servicer. So, I think one theme 
you'll hear throughout this podcast is: talk   to your servicer.

You should not, you know, make 
sure you get- that communication line is open.
  Iskra: Gotcha. After the forbearance has 
ended, say I've already used up my 180 days,   and I've already used the extension. Now what? Is 
it up to the lender? Are there any other options?   What possibilities could happen after that?
McArdle: So, as I alluded to earlier,   there'll be a number of options that your servicer 
will walk you through. Reinstatement is what they   call the paying it all back at once. The repayment 
plan is what they call that paying back over time,   where your payment goes up a little bit. 
There'll be loan modification options, including   streamlined modifications and other modifications 
that allow you to sort of reduce your payments,   if you need that. And others that sort of 
extend your loan by a certain period of time.   And then finally there's a special deferment 
program that VA has rolled out, and other   agencies have as well, which allow you to move 
the missed payments to the end.

And like I said,   when you refi[nance] or you sell your home, 
that's when that is paid off with the proceeds.
  Iskra: Gotcha.
McArdle: There’s a number of   options. Your servicer will walk you through and 
find the one that's most appropriate for you.
  Iskra: Gotcha. Moving it to the end is 
something new that I've heard. You know,   I remember people were talking about the- at 
the beginning of the- when all this started,   but I didn't know it actually went into 
effect. That's kind of cool to hear.
  McArdle: It’s a great option for homeowners.
Iskra: Now, I'm sure you get this question   a lot, gentlemen. Does the CARES Act 
forbearance affect my credit score?
  McArdle: So, the CARES Act has actually very 
specific requirements about how it's supposed   to be reported.

If you were current going into a 
CARES Act forbearance, you will be continued to be   reported as current. If you were delinquent coming 
into a CARES Act forbearance, they'll report that   same level of delinquency. So, it won't get 
bigger during the CARES Act forbearance.
  Iskra: Gotcha.
McArdle: So,   the CARES Act is quite clear about how you're 
treated during the CARES Act forbearance.
  Iskra: So, it's pretty even across the 
board if you're- if you're at a certain,   you know, if you’re current, you’re 
current. If you're not it, like you said,   it doesn't dig you into a deeper hole, right?
McArdle: It doesn't dig you into a deeper hole.   That's correct. But then you- it's also important 
to work with your servicer at the end then   to address the payments that you missed.
Iskra: Absolutely. Now, I know, gentlemen,   you're not in VA, but you deal with the 
VA loan policy all the time. Do you know   any other protections that the VA loan could 
offer? I think you alluded to one already.

  McArdle: Well, one thing that's in place 
for almost all the federally backed loans   is a foreclosure moratorium right now 
that lasts to the end of the year,   12/31/2020, which is already passed at this 
point, but they're all working to extend it to-
  Iskra: Okay.
McArdle: The GSEs, for instance, they've already   extended that to the end of January, if not 
longer. They said at least January 31st, 2021.
  Iskra: Gotcha. Now, gentlemen, you are Consumer 
Financial Protection. Have you guys seen any   issues recently with borrowers trying to ask for 
forbearance from lenders? And is there anything   that can- borrowers do to protect themselves?
McArdle: So, I think the most important thing   a borrower can do is to learn about what's going- 
what they're going to be going through to go   to the consumer finance.gov/housing and read up 
about how it's supposed to work.

And to make sure   if they are getting answers they don't expect, if 
their servicer’s requiring a lump sum payment or   something that is out of the ordinary, that they 
report that to us through our complaint function.
  Rice: Taking that one step further, when that 
doesn't work- and maybe this is your follow-on   question- when they back complaints about how 
the system works one of the- Dodd-Frank Act   calls for the Office of Servicemember Affairs 
is to do, is to coordinate across the Bureau   in order to monitor complaints by servicemembers 
and their families and respond to those complaints   by the Bureau or coordinate with another federal 
or state agency to make that response. And   our internal complaint data shows about a 10% 
increase in mortgage complaints from military   consumers compared to the same time a year ago.
Iskra: Okay.
  Rice: And while we don't, we don't track 
that specifically against forbearance.   So, it's hard to say whether that complaint spike   is related to forbearance.
Iskra: How does something like   that play out? Say there's a mortgage.

you want to make a mortgage complaint.
  Rice: As far as VA borrowers 
protecting themselves,   Mark talked about, we always recommend that they 
first try to resolve that matter themselves with   the servicer. But the complaint system is there 
for those times where veterans can't get an   answer to their problem. So, the Bureau collects, 
investigates, and responds to numerous consumer   complaints and, in fact, Bureau-wide we've 
handled more than 2.4 million complaints.
  Iskra: Wow.
Rice: Of all types. So, not unique-   not unique to servicemember. But so, more than 
5,000 financial companies that responded through   the complaint process of the Bureau and provided 
timely response to about 97% of those complaints.   So, when consumers have an issue with a 
financial product or service that they   can find helpful consumer tools. We 
talked about the consumerfinance.gov,   or they can contact us. The 
Bureau's complaint form also   requires consumers to affirm that the 
information provided in their complaint   is true to the best of their knowledge.

of course, we would get that and forward those   complaints to the company that they've identified, 
we’re secure company portal. And we work with a   company to get that consumer response.
Iskra: During the CARES Act, what's been   the most- you guys got like a story of maybe one 
complaint? Like a successful story of like, “hey,   this is what the borrower actually ran 
into,” when I say borrower, the person that's   borrowing the mortgage- ran into, and the CFPB 
was able to step in and say, “Hey, that's,   that's not right according to the CARES Act,” and 
got that resolved. You guys got anything specific   of something that you guys are seeing?
Rice: I don't have a specific one to share with   the audience at this point.
Iskra: Okay.
  McArdle: Often, I think you'll find 
that, as soon as the complaint is made,   that often the situation gets better.

Iskra: I'm sure. I’m sure! All right. So,   we've discussed a lot. Other than, you know, 
replaying this conversation over and over,   you know, for the veterans that'll be listening 
to episode- which my podcast analytics don’t mind-   where else can veterans find this information? 
I know you guys mentioned a website. I also did   see you guys do have some pretty good material 
on YouTube that you guys produced, some videos   that you guys produced way back in April about 
the CARES Act. Real quick, plug where you got-   where the veteran can find the information.
Rice: Yeah. Consumerfinance.gov/housing,   I think is always a really good site. It was 
worked in coordination with other federal agencies   all working together to get that to get the 
right information for the customer, whether   they're a servicemember, veteran, or across the 
general population, consumerfinance.gov/housing   is a, is a great location to get information.
McArdle: And we recently updated it.

So,   there's going to be new videos there about what 
to do once you're in forbearance, about how to   start forbearance and how to exit forbearance. 
There's also a new consumer guide about NYP facts,   about forbearance that folks can use to arm 
themselves. And all of this is available in   multiple languages just besides English as well.
Iskra: Outstanding. Jim, Mark, final thoughts. Is   there anything else that we didn't discuss, 
or I didn't bring up? Heck, anything that   you want to reinforce that you want to share?
Rice: It was just an opportunity and I- ‘cause I   think it's important for this audience that just 
last month we published a research report on debt   and delinquency after military service, and it 
looks at the use of credit by the servicemembers   and some of the challenges that they have 
in that first year after they transitioned.   That report's available at the CFPB website 
and, you know, happy to share that for folks   who want to reach out.
Iskra: Very good.

  McArdle: The most important 
thing I would say is just not to-   sometimes when you're faced with financial 
difficulties, it's easy to do nothing, to sort of   not answer the phone, to duck the calls. It's 
important to reach out, ask your servicer,   ask a HUD-approved housing counselor for help, get 
information yourself, learn about your options.   Taking action- that- the best thing 
you can do to protect your home.
  Rice: Right. And Mark said it a couple times, 
it's- moderate it alone while it's in forbearance,   work with your mortgage servicer, and 
keep an eye on your credit score..

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