Mortgage Lenders Consider Plan to Suspend Payments Amid Crisis

Businesses across the country have ground to a halt because of the coronavirus outbreak, leaving millions of Americans wondering how they will make their next mortgage payments.

Their lenders may soon say they don’t have to worry — for a while, at least.

A broad group of bankers and other mortgage industry participants is working on a plan to offer a temporary pause in payments on home loans, according to the Housing Policy Council, a trade group that includes Citigroup, Wells Fargo, JPMorgan Chase and Quicken Loans.

Details were still being decided, but the plan would allow borrowers to stop paying for as long as the public health and economic disruptions lasted, said Ed DeMarco, the chief executive of the council. Once the economy gets going again, borrowers would resume making payments.

Mr. DeMarco said he had been talking with banks, servicers and mortgage bond investors to complete the details of the policy. He said that it was not clear when the plan would be announced, but that the group wanted it in place by April 1.

“There are so many people in the industry right now working incredibly hard to make sure we can get some needed assistance in place,” Mr. DeMarco said. “The eligibility is meant to be broad. It’s meant to be to those households and families who have seen an economic disruption as a result of the virus, whether they have been directly affected medically or indirectly, because of the disruption to businesses.”

Mr. DeMarco said the industry groups were keeping the federal government informed of their progress but were not going to wait for any government action.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the two government-run agencies that guarantee most mortgages in the United States, is under mounting pressure to make sure their borrowers don’t lose their homes if they start missing payments.

Consumer advocates have asked for sweeping measures.

“People should not be concerned about losing their homes,” said Alys Cohen, a staff attorney at the National Consumer Law Center. “There should be a total halt to foreclosure activity, including all foreclosure processes and sales and post-foreclosure evictions.”

Groups including the National Community Reinvestment Coalition, which promotes fairness in lending and housing, were scheduled to meet with representatives from the country’s largest mortgage lenders on Thursday, according to the coalition’s chief executive officer, Jesse Van Tol.

The waves of foreclosures surrounding the 2008 financial crisis are still fresh memories for Mr. Van Tol. Back then, he said, federal officials did not move quickly enough to help struggling homeowners.

“The Treasury and the White House got wound up for months and months and years about the moral hazard of helping people, that it would encourage other people to default,” Mr. Van Tol said.

That debate seems to be absent now.

Mr. DeMarco, a former acting director of the Federal Housing Finance Agency, said the very nature of the coronavirus crisis would prevent mortgage servicers from trying to impose rigorous tests on borrowers to determine who really needed help and who did not.

For one thing, he said, privacy laws could prevent lenders from asking about borrowers’ medical information.

“We’re dealing with a national health emergency,” he said.