From If you are in a financial situation due to the pandemic or its economic impacts, you can ask your mortgage lender for a period of forbearance. This period is not permitted to affect your credit score, according to the CARES Act. Any listing of payments missed in that period have to show neutrally and not as 'late,' which would ding your credit score and impact your ability to refinance, take out another loan or other activity affected by a credit rating.
This is - or should be - a relief for mortgage holders. So many people are in dire straits from lost wage hours or unemployment that not worrying about the monthly mortgage is a tremendous help.
However, it appears that a number of companies are skirting the explicit prohibition (and the spirit) of the CARES Act requirement, and including notations that say the borrower is in forbearance. That word, and that notation, can negatively affect whether or not someone's credit is regarded as good enough for new or changed lending.
Some companies are using a 'workaround' that impacts homeowners' credit (Housing Wire)
From the article: '“I think the intent of lawmakers is that forbearance would not harm your credit, when in fact that label may do just that,” Stevens said. “I don’t believe consumers are aware they have this scarlet letter being reported on their mortgage.”'
CFPB gets earful from consumers about mortgage servicers (American Banker)
From the article: "Distressed consumers are bombarding the Consumer Financial Protection Bureau with complaints that mortgage servicers are refusing to provide deferrals for skipped payments, or are forcing homeowners into forbearance plans they didn’t ask for."
Record unemployment drives forbearances up (National Mortgage News)
This chart from National Mortgage News shows how many people are beginning to take advantage of the forbearance options, increasing week over week as unemployment continues to grow and lengthen.
The CARES Act blog is intended to provide information and is accurate and true to the best of the author's knowledge. The author is not a legal, medical or financial professional and the information presented should not be considered advice and is for reference only. Lehigh Valley Public Media and its employees claim no liability for any actions taken by readers based on the information provided here.