I just called my bank for a different reason but did go ahead and confirm what he said. They WILL be requiring the 3 months deferred and the current payment on the 4th month. As they said, it isn't an extension of the loan. I am not speculating as to the reason behind doing it this way, but I can imagine there will be a lot of folks in hot water when 4 payments are due in 4 months if they deferred those payments.
The key to what you said here is the "CURRENT payment on the 4th month" - that means ONLY the payment of month #4 is due...
Now I see where you guys are making that left turn at Albuquerque…let me try and explain this again.
Let’s say you took out a 30-year mortgage in September of 2012; and let’s say the payments were a nice even $1000 each month. This would make payment #1 due on October 1, 2012, and payment 360 – the final payment, due on September 1, 2042.
If this was like a car payment in the 20th Century, you would receive a payment book with a slip to turn in with each payment, showing you the amount of that payment, and the final one would not have a dollar figure attached to it. There would be no dollar figure because the bank couldn’t predict the future when you signed the loan, and there was no way to know what extra payments you might make over the life of the loan, or if you would miss any payments in that time either.
So, what happens with deferred payments? Well, this is like the last page of that payment book, for the stuff the bank couldn’t predict when you signed the loan.
Now, back to that 30-year mortgage you took out in September of 2012…
April 2020 is payment #91, May #92, June #93, July #94. These payments are deferred. This does not mean you must give the bank the total value of payments #91-#94, plus #95 in August of 2020, or $5000. Nope, you only owe the bank payment #95 in August of 2020.
But what happens to the deferred payments of #91-#94?
Remember that blank slip at the end of the payment book – THIS is where those deferred payments become due.
At this point, you’ll have a few options:
1. You could pay it in a lump sum because you got lucky and found a big bag of money on the street in August of 2042.
2. The bank will know you don’t have that cash laying around because you forgot about those deferred payments and allow you to get a home equity loan for it (because let’s face it, at this time you have near 100% equity).
However, what will most likely happen with most of the people who get deferred payments is they will sell their homes long before the final payment on their house, and that outstanding balance including the deferred payments will be paid at that time.
So once again, like I’ve stated before, banks want to be in the money business, not in the real estate business. Remember what happened in 2008 when people walked away from their homes and owed tons of money. This caused the banks to own real estate they didn’t want, people’s credit was in the crapper so there wasn’t anyone to loan money to, and home values dropped and the banks were forced to sell that real estate they didn’t want at a loss.
Trust me, banks don’t want this to happen again, that’s why they are acting like the good guys right now with deferred payment plans, because the alternative is not the outcome they want.
Oh, and one other option you have is to take the dollar amount of the deferred payments (in my example that would be $4000), and divide that by the number of remaining payments (in my example that would be 265), and pay that amount extra each month for the remainder of the loan so it doesn't bite you on the butt at the end.
No, I confirmed with my bank, Chase Mortgage, that all 4 payments will be due on the 4th month. I spoke with them directly and asked that exact question. The 3 months are NOT extended to the end of the loan. All 3 PLUS the 4th will be due on the 4th month payment date.
While it still is possible that the individual with whom I was speaking with at Chase did not know what they were talking about, that is how they explained it.
Think about it this way: what good would that do anyone, the customer or the bank?
Beats me, but that is the info I received.