The Mortgage Deferral Game Plan: Rules Everybody Must Know to Win
May 31, 2020
Don’t be afraid to stand up for yourself and work out some kind of plan. And if you negotiate deferred payments, you’re not late, so there should be no hit to your credit score.
What you might don’t know is that a deferred payment can show up as a late payment on the Equifax and TransUnion report. The credit reporting agencies, Equifax and TransUnion, don’t qualify the information they receive. The only thing that matters is how lenders’ systems report deferred payments to them — as late or not.
Unfortunately, much of this data is generated automatically, and many of the lenders’ computer systems haven’t been adjusted to reflect the general availability of deferred payment arrangements during this time.
1. Do not be reassured about your credit rating by talking with a lender’s customer-service representative by phone. Given the heavy volume of calls currently, many of those answering the busy bank phone lines are not lending experts, but other employees pitching in. Customer service reps can tell you all kinds of things about your credit score, but they’re irrelevant. The only thing that matters is how the lender’s system reports deferred payments to Equifax. It’s tough to get a human on the phone and lenders aren’t prepared for this. Employees are reading off scripts and you can’t talk to someone who can actually make a decision. However, it’s important to connect somehow.
2. Be proactive, especially if you’re not getting a paycheque this week. Don’t just let the payment bounce. Ask for a deferral. You don’t want an insufficient-funds fee added to a cheque that can’t be processed. Since banks may be offering deferrals a month or two at a time, it’s up to you to ask about additional extensions. Remember, Lenders are in uncharted territory and there’s no system in place to remind them to follow up with you in 25 days, so do so yourself.
3. Consider investigating deferrals on other payments, such as credit cards and lines of credit. To protect your credit rating, no matter how slow lenders are to adjust their reporting systems, a written confirmation is best. If you can get something in writing to say that the payment is deferred, not missed, that’s best. If you can’t get something in writing, get the employee number and name of the customer service agent who is promising you that your credit won’t be affected and note the date and time of the conversation. Keep a record so that you can dispute any errors they make in reporting to Equifax and TransUnion.
Protect yourself financially. Ask your bank to stop any automatic bill payments you’ve arranged, to allow you more control over your money. Talk to your landlord, too. If your cheque won’t clear, they can’t evict you or garnish your wages if the courts are closed.
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