Ch. 6: Soto proposes CARES Act addendum to end balloon payment ‘loophole’
ORLANDO, Fla. – Homeowners granted deferred payments because of unemployment linked to COVID-19 would no longer face balloon payments after the forbearance period expired under a new proposal sponsored by Rep. Darren Soto (D).
The Florida District 9 lawmaker told News 6 the current version of the CARES Act provides deferred payments of up to 180 days but still leaves the payment options to the lender.
“If you give discretion and make the program too complicated it is almost inevitably going to fail the homeowners,” Soto said Tuesday.
Recent reports have shown many borrowers are concerned that servicers are offering a balloon payment option that would require the entire amount owed for the forbearance period to be paid at once. Soto argued most struggling homeowners “do not have the money to make this lump sum payment” when they’ve just recovered from COVID-19, job loss or other financial hardship.
Soto is a veteran attorney who handled bankruptcy cases during the 2008 recession.
He said he is confident there will be bipartisan support for the measure.
Kay Spraggs, an unemployed restaurant server in Ocala, lost her job on March 20 due to COVID-19.
She said the balloon payments force consumers into a no-win situation.
“This is the craziest thing I ever heard in my life," she said. “Where are they going to get the money?"
Soto said the legislation would ensure that the bank would still get the funding they are owed, giving the homeowner a “simple reprieve” without late fees or penalties.
“The effects of the coronavirus are hard-hitting and being felt across all sectors of American life,” Soto said. “Due to COVID-19 illnesses, layoffs and mass unemployment, millions of homeowners need a simple, national plan for real relief. The Save Our Homes Act gives Central Floridians and all Americans a real chance to save their homes and recover from this crisis.”