As the pandemic leaves a growing number of people unemployed, lenders are fielding an unprecedented number of loan forbearance requests.

While borrowers with government-backed mortgages from lenders like Fannie Mae or Freddie Mac can skip at least six months of payments under the coronavirus relief bill, many with private loans have been receiving mixed messages.

Guidance on how long payments can be deferred — and when they must be paid back — has been fluctuating in the weeks since COVID-19 took hold, leaving borrowers stressed over missed payments, possible huge lump-sum payments or the prospect of poor credit.

Amy Smith, a Lewiston landlord who holds private mortgages with multiple entities, said Friday that she’s received mixed messages from the beginning. She was granted a 90-day forbearance from two lenders, anticipating that many of her tenants would run into trouble making rent payments.

One lender told her she’d have to pay back all three mortgage payments on day 91. When she tried to refinance the loan instead, she was told she couldn’t refinance a loan in forbearance.

She said that because most of her tenants have been able to pay rent, largely due to federal and state relief programs, and a few payment plans, she likely didn’t even need the forbearance.

When Smith talked to a representative about the lump-sum payment, she was told to call back on “day 75” regarding whether the bank would extend the forbearance. There was nothing in writing from the bank, except for a few late payment notices that she was still receiving despite having forbearance approval.

“It’s been super stressful,” she said. “The real issue is, all these systems are all designed for a normal economy. I don’t think anyone is to blame, there’s just all these preexisting systems in place. These are not institutions that can rapidly change the way they do business.”

In mid-April, Gov. Janet Mills issued an executive order urging all financial institutions “to work proactively with Maine homeowners and small businesses experiencing financial hardship from COVID-19,” but the order does not lay out blanket rules for banks.

While Smith owns multiple properties, and has several tenants, she said her dealings with local banks are likely symbolic of what other homeowners and property owners are dealing with during the crisis.

The Sun Journal reached out to a number of banking institutions Friday to receive the most up-to-date guidance for borrowers. The overall message: If you have a government-backed loan, you can likely pause payments. Talk to your lender. If you have a private mortgage, talk to your lender and see what they can do. Some are offering ways to delay monthly payments.

Karen Crane, senior communications manager for KeyBank, said Friday that every situation is different and that borrowers are encouraged to work directly with their local representatives to “evaluate their circumstances and find the right option for them.”

Crane said KeyBank is offering a temporary three-month payment deferral for homeowners experiencing financial hardship in paying their mortgage or home equity loan, which requires a lump-sum payment at the end of the suspension term.

However, she said, “we realize this may not be enough.” The bank is also offering the option of extending the forbearance an additional three months, and is offering repayment plans if a lump-sum payment is not possible.

Crane said the bank may also offer a “loan modification” that could provide “even more flexibility.”

More information can be found on the KeyBank website under “homeowner hardship relief.”

Kate Toy, senior communications manager for TD Bank that services government-backed mortgages and their own residential mortgages, said a forbearance can be obtained for up to one year, depending on the individual situation.

While those with a mortgage backed by Fannie Mae or Freddie Mac automatically have at least 180 days, TD has created “TD Cares” to offer forbearance options for residential mortgage and home equity loans that the company owns and services.

Toy said, “this includes delayed payments in 90-day increments up to one year, and late fee refunds if applicable. Further, we will contact the borrower to discuss their options for repayment before the end of the forbearance period.”

“If a borrower has been impacted by COVID-19, it’s important they speak directly with their lender to understand the options that may be available to them,” she said.

Toy added that TD is offering repayment options “consistent with the general guidelines established by Fannie Mae and Freddie Mac,” including short-term repayment plans, payment deferral to the end of the mortgage, loan modifications to reduce monthly payments, or repayment in full through a lump-sum payment.

Relief programs

In response to the crisis, some coronavirus relief funds have been put toward programs to provide direct payments to landlords or lenders.

In Lewiston, a sudden windfall of additional Community Development Block Grant funding will be allocated toward a rental or mortgage assistance program.

City officials have said tenants and homeowners who are income qualified — making 80% of area median income or less — could receive up to $1,000 for rent or mortgage payments. While the tenant or homeowner must apply, payments would go directly to the landlord or mortgage lender.

The funds will become available May 6 if approved by the City Council on Tuesday.