State officials question mortgage providers on Sandy-related payments

March 07, 2013 09:30AM

New York state officials will investigate whether banks are pushing Sandy-hit homeowners to pay monthly payments despite agreeing to  postpone them after the storm hit, the Wall Street Journal reported.

Twelve banks — including major players such as Wells Fargo, Bank of America and J.P. Morgan Chase — had agreed to postpone payments for up to six months without demanding a lump sum at the end of the period, the state said. However, some homeowners had complained that the banks weren’t honoring their commitment. “While the total of complaints was small, a couple dozen, the impact on individual homeowners is huge. By focusing on this issue early, we can prevent it from hurting others,” David Neustadt, a state spokesman, told the Journal. 

The state is asking the banks how many owners requested and received the payment delays, known as forbearance, and how banks have reported during the delay period, in order to ensure that homeowners’ credit scores would not be adversely affected.

Pete Mills, a spokesman for the Mortgage Bankers Association, said in a statement that, “servicers are actively reaching out to make contact with borrowers and let them know that the initial 90 day moratorium is expiring or has expired, and that they should contact their servicers to decide if the they want to repay the forbearance amount in full, extend the forbearance period even further, or convert the forbearance amount into an affordable repayment plan or a permanent loan modification.” [WSJ]  – Hiten Samtani