Skipped mortgage payments brought relief to N.J. homeowners, but for some the help is running out

Published October 23, 2020
By Joe Hernandez

When Joe Mangino got laid off from his job in the spring, he could no longer afford his mortgage payments.

The Beach Haven West resident signed up for a state program that let him skip his mortgage payments for 90 days due to the pandemic. Although the program was voluntary for banks, Mangino’s lender was among more than 150 institutions that participated.

But after his 90 days were up, Mangino got bad news: his bank wanted the three months worth of payments in a lump sum right away.

“I don’t know why they would expect anybody to come up with $5,000, $6,000, $7,000, $8,000 in a lump sum when for the past 90 days they haven’t been able to make their basic mortgage payment,” Mangino said. “I just don’t understand the logic behind it. It’s not helping anybody.”

New Jersey’s mortgage forbearance program was a lifeline for many homeowners struggling to pay their bills during the economic crisis brought on by the pandemic, but critics say it has its drawbacks.

First of all, the program was voluntary, and some lenders didn’t participate. For those banks that did, there was no obligation that they extend the forbearance beyond 90 days at a borrower’s request.

Now, housing advocates say there is little in the way of a safety net to catch homeowners who are falling into a ruinous financial spiral due to the coronavirus.

“When there are homeowners who are unable to pay their bills, it is bad for everyone,” said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey.

Although no homeowners facing foreclosure can be kicked out during the pandemic, many still want to make good on their payments to avoid trouble later on, she said.

Berger called on the state government and banks to come up with a plan for people who cannot pay their mortgages, and endorse a bill in the legislature that would bar banks from requiring lump sum payments after a period of mortgage forbearance.

The legislation (S-2340/A-4034) would let homeowners who received mortgage forbearance during the pandemic repay those months at the end of their loan by tacking on extra months of payments then.

“We need to make sure that we’re putting people at the front and center of the decisions that we’re making, and ask the banks to come up with a way to write that loss off or figure out how to work with those homeowners to make sure that they’re able to pay those bills,” Berger said.