COVID19 Forbearance

The “good” news is banks, lenders and servicers are PROMPTLY providing unprecedented responses to this crisis we’re all in. The very unfortunate bad news is that the scale of the assistance being offered really just provides hints and input into just how catastrophic this really is.

Ignore the news reports that suggest this is all on some scale of minor and instead think about the absolutely extraordinary circumstance we’re all in now where the what is essentially the federal government (FHFA) is allowing hundreds of millions of Americans to suspend payments of nearly all their debts.

Just Let That Sink In For A Moment 

America is, above and beyond all else a commerce and banking entity. Commerce, banking, money….that’s the real lifeblood and soul of our government.  Everything else is ancillary. And when you consider the scale of the relief that was issued so early on (at least March 10, 2020), you really begin to understand the scope of the problem.

Just How Big Is The Catastrophe We’re Living In?

As you consider your own financial situation, think as well about the hundreds of millions of people are on reduced jobs or who lost their jobs entirely. In the first reporting alone, 3.3 Million people applied for unemployment assistance. As bad as that is, it doesn’t even begin to touch the scope of the crisis. Close to home, think about Orlando. Orlando shut down. Shut down entirely.  How many million people are impacted in Orlando alone when none of them have any means to make any money? And assume tomorrow magically, COVID is solved! At what point in time does Disney reopen?  It’s crystal clear that Disney will NOT be reopening on April 1 as first reported.  It’s likely Disney won’t be opening for several months at the earliest. And after it’s opened, whenever that is….how many people are going to be rushing those turnstiles? The clear answer is, not many, not for a long time. The far more likely scenario is a Depression-style crash that shutters travel and entertainment sectors for a very, very long time.

So with those little nuggets in mind, have a look at some of the details surrounding the new COVID Servicing. Pay attention to the very bad nuggets included within the forebearance option….requirement of immediate repayment for all reduced amounts……but then who even knows what the world looks like on the other side of this anyway…..

 

 

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