BUSINESS LAW 101 / The Failure of Banking Relief Measures after Hurricane Irma

By Albert L. Kelley, Esq.

Immediately after Hurricane Irma, many national banks such as Wells Fargo issued statements that they’re providing mortgage and credit card relief to residents in the areas affected by the hurricane. During the relief period, the banks agreed to waive late fees and late credit reporting. People accepting the relief expected that this would allow them to get back on the feet, give them time to reestablish income loss during the evacuation and subsequent rebuilding, and then resume the standard payment schedule after three months. It seemed like a true example of corporate and community working together. However, the phrase “there is no such thing as a free lunch” has come back with a vengeance.

As the three month window is ending, many homeowners are finding that the promises, assurances and statements made by the banks were not completely true. It would be easy for the banks to simply move the three-month payments to the back of the mortgage, waiving any additional interest those payments would cause. But that is not what some banks are doing. As an example, Wells Fargo recently sent out a letter to those impacted stating “Disaster relief is coming to an end this month, and we want you to know that your missed payments will now become due.” They then follow it with, “If you’re not able to make the missed payments, please contact us as soon as possible.” The letter also states, “Please understand that late fees, negative credit reporting, and collection notices will resume”. In other words, while they gave us three months of relief, they’re now expecting those three months payments to be made immediately. Asking people who have been struggling since the hurricane to cough up three months of mortgage payments is not “relief” as most of us know it. And if you are not able to make those payments, there is a possibility that you will be now hit with the late fees and negative credit they promised would not happen. If you try to resume your normal monthly payments through an online payment system, you may find that these payments are no longer accepted as the bank may now list you as being in a delinquent status. Until the delinquency is resolved, the online bill paying system may not be available.

In a call with a Wells Fargo representative regarding this issue, it was learned that the payments put through the hurricane relief program were now being handled by the home retention department-the same department that handles the bank foreclosures. They advised that the bank did not have a set policy for how these relief payments would be handled, but rather would have to send each individual case to the bank’s underwriter to determine how the past due payments would be resolved. This answer is similar to what many homeowners heard during the foreclosure crisis of 2007 when the banks told the homeowners they needed to be three months behind in their payments before the home retention department would discuss the mortgage with them and then, many times, refuse to work with the homeowners, forcing the properties in the foreclosure. It now appears that some banks may be doing this again.

Any homeowner who took advantage of the hurricane relief programs needs to contact their bank directly to start making repayment arrangements, or they may risk being put into foreclosure. If not satisfied with their response, a Complaint may be filed with the Florida Department of Financial regulation at https://www.flofr.com/StaticPages/FileAComplaint.htm

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of “Basics of Business Law” “Basics of Florida’s Small Claims Court” and “Basics of Florida’s Landlord-Tenant Law” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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