CHICAGO (WLS) -- The CARES Act passed by the federal government is offering some protection for homeowners with mortgages, but much of this help could depend on what kind of mortgage you hold.
Two small local business owners are now struggling to stay in their homes. In Chicago's North Park neighborhood, Simona Raganovic runs a limo service for business clients. Her cashflow has ground to a halt.
"The last money we are expecting to come in are from the last month of February," she told ABC7 I-Team Consumer Reporter Jason Knowles.
Tracie Bell, who lives in Plainfield, owns a hair salon.
"There are no options right now other than to completely shut down," she said.
Both Bell and Raganovic are long-term homeowners, with families, and both are wondering if they will be able to pay their mortgages as the coronavirus pandemic cripples their incomes.
Both women said their banks have been telling them that they would qualify for a 90 day forbearance on their loans, meaning no payments or late fees. But the problem is on day 91 they both said they were told they would have to make three months of payments in one lump sum.
Raganovic said there is no chance she'll be able to pay that.
"Yeah, that was so shocking to me because I was like, 'If I don't have it now, I won't have it three months' worth in one lump sum,'" Bell said.
The recently passed Coronavirus Aid, Relief and Economic Security, or CARES, Act requires only federally backed mortgages to grant a forbearance of 180 days and an additional 180 days if the homeowner can prove financial hardship.
Bell said she just found out she may now qualify, but Raganovic said her loan is not federally backed so she will not. In fact, one-third of all mortgages in the U.S. are not federally backed, so thousands could face the same tough financial reality.
"I think concerns are valid, we are worried about consumers as well," said Nathan Britsch, vice president of the Illinois Mortgage and Bankers Association.
Britsch said that no matter what type of mortgage a person has, they should keep calling their banks about ever-changing options. He said it is not in the bank's best interest to have foreclosures.
"Every mortgage company that I am speaking to right now wants to find a way to keep borrowers in their homes, as long as you're willing to have those conversations with your servicer," he said. "I have not spoken to anyone in the industry who is not willing to help or does not want to assist keeping everyone in their home."
Britsch also said lenders are in a much better position than during the mortgage crisis of 2008 because borrowers have been vetted more and loans are more secure, with updated lending rules.
"So absolutely nobody wants to see what happened in 2008 happen again," he said. "We feel that this is much different, federal regulation has gotten much stronger."
"The first idea is to stop the bleeding and keep people in their homes," said Ben Harris, economist and professor at Northwestern University's Kellogg School of Management.
Harris said lenders will also be showing grace to all borrowers, including landlords with mortgages.
"It depends on the type of unit the landlord has; the stimulus offered some relief for multi-family landlords. Landlords who own a single unit, my suspicion is they will get some forbearance on those payments," he said.
Bell's bank, PNC, said it encourages customers to connect with them about forbearance options which could include "moving the payments to the end of the loan term, offering a repayment plan, or enrolling the customer in a longer-term modification option."
Raganovic's bank, Chase, said it's working with customers like her and that a 90-day forbearance offer is an immediate measure but there could be other options down the road.
"It's just all these big questions that people are going to have to deal with on top of all this other stress," she said. "No job, no income, how are you going to take care of your family, what is going to happen?"
If you're in this situation, start reaching out to your bank now; with the influx of calls, you may want to try online first.
Document all of your phone calls and emails with your bank or lender. Also keep any documentation or proof that you no longer have an income due to COVID-19.
Remember, when sending any sensitive or personal information, make sure you are contacting the bank and not a scammer who could be phishing you.
Coronavirus stimulus mortgage relief only applies to some loans, could leave other homeowners struggling
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