With the coronavirus pandemic devastating the US economy, many homeowners are unable to work and unable to meet their financial obligations. Fortunately, Congress passed The Coronavirus Aid, Relief, and Economic Security Act – or CARES Act – which offers mortgage help to those affected by the outbreak.
Specifically, section 4022 of the act requires servicers of federally backed mortgages to postpone mortgage payments at the request of the borrower, provided the borrower affirms financial hardship either directly or indirectly due to COVID-19. The postponement must be granted for up to 180 days. It must also be extended for an additional period of up to 180 days at the request of the borrower.
No fees, penalties, or interest beyond interest already scheduled can accrue during the forbearance period.
Additionally, servicers must grant forbearance without requiring any documentation except one. They must only require a borrower’s “attestation to a financial hardship caused by the COVID-19 emergency.”
The act also forbids the servicer of a federally backed mortgage loan to initiate any foreclosure process for at least 60 days beginning on March 18, 2020.
The process seems straightforward – simply calling your servicer and asking for relief. However, cases where servicers added extra hoops to jump through also exist. Some also made their own rules for how the skipped payments would be recouped.
Jim and Julia Hansen lost their incomes when the tourism industry shut down in their home state of Hawaii.
They reached out to their lender to ask about deferring their mortgage payment. While they were told they could delay their payment for three months, there was one massive catch: at the end of those three months, they would need to come up with a lump-sum amount totalling four-months of mortgage payments to bring the loan current.
That’s not what guidelines indicate, and the Hansen’s are currently weighing their options to seek appropriate relief.
Servicers making their own rules is a major concern for Richard Cordray, former director of the Consumer Financial Protection Bureau. He recently co-authored a letter to the current CFPB board. In it, he implored them to do everything they can to make the servicers follow the rules.
“We saw in the last crisis how their indifference and ineptitude led many mortgage servicers to push homeowners into needless foreclosures that undermined our communities. Already, there are worrying signs that people are getting the runaround as they seek forbearance or other relief. New rules were put in place several years ago to address these problems, and the mortgage servicers cannot now be excused from complying with these rules when consumers need them the most. Servicers also must live up to the letter and spirit of the CARES Act by helping consumers avoid foreclosures wherever possible, rather than using the money made available by Treasury and the Fed simply to pad their bottom lines.”
Follow These Steps When Seeking Mortgage Relief
Are you looking for mortgage relief due to the coronavirus pandemic? Follow these steps to give yourself the best chance at a successful outcome:
- Determine who your service provider is. This may or may not be the bank or lender who holds the actual mortgage on your home. They will be the ones you need to contact to start the discussion.
- Find out if your loan qualifies for relief. Your lender should be able to tell you if either Fannie Mae or Freddie Mac backs your loan. If one of the government-sponsored enterprises backs your loan, you are eligible. If they don’t, you may still have options.
- Find out how the servicers will handle the skipped payments. Will you see them included at the end of your loan term? Can they be spread out over future payments? Get a clear answer, ideally in writing, before moving forward. You don’t want any misunderstandings down the road.
- Determine how real estate taxes and insurance will be paid. Do you have an escrow account that pays your taxes and insurance? Those two accounts likely won’t continue to be funded by your monthly payments, since they are being skipped. Find out from the lender how the taxes and insurance will be paid if the balances are short.
“If your lender pays it, find out what’s going to happen during the time you’re not making payments and what happens if they pay,” says Barry Zigas, senior fellow at the Consumer Federation of America. “How does it all get figured out at the end?”
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Bill Ackman Warns ‘America Will End As We Know It’ If We Don’t Shut Down the Country
Billionaire investor Bill Ackman appeared on CNBC yesterday and had an impassioned plea for President Trump as well as corporate America.
To stop the spread of the coronavirus that is wreaking havoc on the economy, Ackman says there is only solution:
“Shut it down.”
Ackman told the host of Halftime Report that ‘What’s scaring the American people and corporate America now is the gradual rollout. We need to shut it down now. This is the only answer.”
He believes that shutting down the country for 30 days, is the only way to save the economy.
If we don’t, he warns the outcome will be even more dire:
“America will end as we know it. I’m sorry to say so, unless we take this option.”
He also tweeted “With exponential compounding, every day we postpone the shutdown costs thousands, and soon hundreds of thousands, and then millions of lives, and destroys the economy.”
In the same string of tweets, he also calls for a “30-day rent, interest and tax holiday for all.”
Ackman also says companies should stop their stock buyback programs because “hell is coming”, implying that they should be doing everything they can right now to hoard cash.
He also says that without efforts like a 30-day shutdown to slow the advance of the virus, many industries will be forced into bankruptcy.
“The hotel industry and the restaurant industry will go bankrupt first, Boeing is on the brink, Boeing will not survive without a government bailout. Capitalism does not work in an 18-month shutdown, capitalism can work in a 30-day shutdown.”
Ackman says hotel stocks like HIlton “could go to zero” without the government taking action to slow the spread of the coronavirus.
“Every hotel is going to be shut down in the country. … If we allow this to continue the way we have allowed it to continue, every hotel company in the world is done. No business can survive a period of 18 months without revenue,” he added.
The comments could be viewed as Ackman talking his book, as he is a major shareholder in Hilton Brands (NYSE: HLT). Any government relief would help his position in Hilton.
Ackman said he was “aggressively buying stocks including Hilton today. And I’ve been buying all the way down — Hilton, Restaurant Brands and Starbucks.”
He says his worries today started back in January when he had a premonition that a “tsunami” was coming.
“Beginning in late January I was getting increasingly bearish and I woke up with a nightmare. And my nightmare was you have this virus that replicates and infects incredibly rapidly.”
Ackman added that his colleagues thought he was a “lunatic” when he withdrew cash from an ATM.
To cap off what was an interesting day of tweets and television appearances, Ackman also believes that if President Trump does shut down the country for 30 days and the virus is under control, then Trump can win re-election.
Video Conferencing Stock Soars As Offices Shut Down Over Coronavirus Worries
As the reported cases of the coronavirus increase here in the US, a few companies are taking pre-emptive measures and shutting down their offices to everyone except the most critical employees.
On Tuesday, Google announced that all of its North American employees, more than 100,000 in total, should work from home effective immediately and plan on working from home until April 10th at the earliest.
The company also banned visitors to its New York and San Francisco Bay Area offices.
It’s the latest major company to ask its employees to stay home in an effort to curb the spread of the virus. Apple, Amazon and Facebook have already asked employees to cut back on travel and work from home if possible.
The outbreak has also had a major effect on conferences and public events. Facebook’s Global Marketing Summit and Adobe Summit 2020 were cancelled, and Google and Microsoft plan on making their upcoming conferences digital only.
While these major companies have solutions in place to keep their employees connected and working at full capacity during the coronavirus outbreak, millions of small and mid-size businesses don’t have a go-to solution to keep employees connected if offices are shut down.
Most will face a decision in the coming weeks: if we close our business and allow our employees to work from home, how will we maintain communication to keep the business running?
For many the solution will be video conferencing, and it presents an opportunity for investors who expect an uptick in business over the next few weeks and months for these platforms as more and more businesses take advantage of their capabilities.
Here are three publicly traded video conference companies to consider:
GoToMeeting (owned by LogMeIn, ticker: LOGM) – offers solutions for businesses of all sizes and is compatible with all operating systems and mobile devices. It can support up to 25 unique users in a meeting with a high-definition video feed (more can join with a standard definition feed) and all meetings are recorded and stored.
Xoom (ticker: ZM) – offers scheduled and ad-hoc meetings in personal meeting rooms, video webinars and conferencing rooms. All meetings are saved and stored on the cloud, and meetings can support up to 1,000 video participants and 10,000 viewers.
Skype (owned by Microsoft, ticker: MSFT) – the original and possibly the most popular video conferencing app. Skype users have the ability to call phones without the other party using Skype, an additional benefit that other platforms don’t offer. Also has high-definition video conferencing, live subtitles, screen sharing, webinars and the ability to send SMS text messages.
Of the three stocks above, Zoom has had the best return year-to-date, jumping an impressive 59.45%. Just last week the company reported Q4 2019 results and revenue increased 78% year-over-year to $188.3 million. Most importantly, the company reported that the number of customers with 10 or more employees increased 61% year-over-year.
This is the company that could grab the most business in the weeks and months ahead as more and more businesses shift to video conferencing to keep employees connected during the coronavirus outbreak.
Senate Passes $8.3B Bill to Fight Virus
WASHINGTON (AP) — The Senate passed an $8.3 billion measure Thursday to help tackle the coronavirus outbreak in hopes of reassuring a fearful public and accelerating the government’s response to the virus, whose rapid spread is threatening to upend everyday life in the U.S. and across the globe.
The money would pay for a multifaceted attack on a virus that is spreading more widely every day, sending financial markets spiraling again Thursday, disrupting travel and potentially threatening the U.S. economy’s decade-long expansion.
Thursday’s sweeping 96-1 vote sends the bill to the White House for President Donald Trump’s signature. Sen. Rand Paul, R-Ky., cast the sole “no” vote. The House passed the bill Wednesday by a 415-2 vote.
The plan would more than triple the $2.5 billion amount outlined by the White House 10 days ago. The Trump proposal was immediately discarded by members of Congress from both parties. Instead, the bipartisan leadership of the House and Senate Appropriations committees negotiated the increased figure and other provisions of the legislation in a burst of bipartisan cooperation that’s common on the panel but increasingly rare elsewhere in Washington.
“In situations like this, I believe no expense should be spared to protect the American people, and in crafting this package none was,” said Appropriations Committee Chairman Richard Shelby, R-Ala. “It’s an aggressive plan, a vigorous plan that has received an overwhelming positive reaction.”
Trump was sure to sign the measure, which has almost universal support. It is intended to project confidence and calm as anxiety builds over the impact of the virus, which has claimed 12 lives in the U.S.
“The American people are looking for leadership and want assurance that their government is up to the task of protecting their health and safety,” said Sen. Patrick Leahy, D-Vt.
The impact of the outbreak continues to mount. The British government is considering suspending Parliament for five months in hope of limiting the spread of the virus in the United Kingdom.
The legislation would provide federal public health agencies money for vaccines, tests and potential treatments, including $300 million to deliver such drugs to those who need it. More than $2 billion would go to help federal, state and local governments prepare for and respond to the coronavirus threat. An additional $1.3 billion would be used to help fight the virus overseas. There’s also funding to subsidize $7 billion in small business loans.
Other dollars would be directed to help local officials prepare for the potential worsening of the outbreak and subsidize treatment by community health centers. Medicare rules would be loosened to enable remote “telehealth” consultations whereby sick people could to get treatment without visiting a doctor.
Sen. Maria Cantwell, D-Wash., whose state is at the center of the crisis, praised the bill because it “will increase access for public lab testing, help pay for isolation and quarantine, help pay for sanitizing in public areas, better track the virus and those who might come into contact with it, help labs who are trying to identify hot spots, and limit exposure.”
The legislation contains a hard-won compromise that aims to protect against potential price gouging by drug manufacturers for vaccines and other medicines developed with taxpayer funds. Health and Human Services Secretary Alex Azar would have the power to make sure commercial prices are reasonable. Azar is a former drug industry lobbyist.
Democrats said other steps may be needed if the outbreak continues to worsen.
“This may be a first step because we have issues that relate to unemployment insurance for people who are put out of work.” Pelosi said as she signed the bill to send it to Trump.
“We have only about 27% of people in this country who have paid sick days. So if they have to go home what is going to happen to them and their families?” said Rep. Rosa DeLauro, D-Conn.
DeLauro said Pence responded that he would raise the issue with the president.
The bill seeks to restore $136 million that the Department of Health and Human Services cut from other accounts such as heating subsidies for the poor to battle the virus.
The legislation comes as carping over the administration’s response to the outbreak is quieting down. Lawmakers in both parties had faulted a shortage of tests for the virus and contrasting messages from Trump and his subordinates. In an interview with Sean Hannity of Fox News on Wednesday, Trump downplayed the lethality of the virus, saying the World Health Organization’s updated estimate of a 3.4% death rate in coronavirus cases is “a false number.”
“Now you’re starting to see rapid deployment of tests, which makes me feel better, quite honestly,” said Rep. Raul Ruiz, D-Calif., a doctor. “I think their communications are a little better. As long as the president doesn’t contradict the experts and the scientists who know what they’re doing, things will get better.”
© 2020 AIM Media Midwest Operating, LLC.
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