‘We want people to stay in their homes’: Mortgage lenders don’t expect a flood of foreclosures when moratorium ends

At Greenfield Savings Bank, about 20% of mortgage customers are in deferral, said President John H. Howland.

These are people who have told the bank they’ve suffered an economic loss from the coronavirus pandemic.

“It allows people to not make payments,” he said. “It basically goes on the back end of the mortgage.”

But now those deferrals of 30, 60 or 90 days are ending just as the statewide moratorium on mortgage foreclosures is set to end Saturday. A moratorium on residential evictions is also expected to sunset.

All are measures meant to soften the blow and guide households through COVID-19. But even with the moratoriums ending, local mortgage lenders don’t expect a rush of foreclosures to come sweeping through the system, as they did in the 2008-09 recession.

“We don’t know what is going to happen when the deferral period ends and people start payments,” Howland said. “We want to work with everybody we can work with. We’d rather have the people stay in their house.”

A preference to avoid costly and lengthy foreclosure processes, in favor of working out payment plans or deferrals, is common among lenders at community institutions.

“I think we have been very lucky in the sense that we have been able to work with our customers and set up a number of options for payment plans at this time,” said Barbara-Jean DeLoria, senior vice president and chief credit risk officer at Florence Bank.

She also doesn’t see a flood of foreclosures coming. If there are foreclosure cases waiting in the wings, she said, those customers were in trouble even before COVID-19.

“I think every bank has cases that they are going to start,” she said.

For Florence Bank customers who deferred payments due to COVID-19, DeLoria said the bank has been successful about getting them back on a payment plan that makes up the missing payments over time.

“Again, our main goal is to keep people in their homes,” she said.

It’s easier for a local bank, she said, where customers can talk with a banker and work out a plan. Florence Bank also continues to own its mortgages, not selling them off to investors. This gives Florence Bank more flexibility in working with customers.

Low interest rates also mean that some customers who knew they’d need flexibility have been able to refinance at a lower rate and lower their payments, DeLoria said. But refinancing is only an option for borrowers who qualify and are not too delinquent on payments.

On Tuesday, state Secretary of Housing and Economic Development Mike Kennealy said the state’s focus is on delivering relief to renters and homeowners without extending the moratoriums.

“There are forbearance rights built into every mortgage both at the state and federal level, and it was our thought that we really needed to aid renters directly with dollars, and folks that had issues with mortgages would have their forbearance rights in place,” he said at a Boston press conference.

Steph Solis of MassLive contributed to this report.

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