One of the most common questions we’ve heard from mortgage professionals is whether it’s true that lenders can’t report “lates” during the pandemic. The answer? No!

The CARES Act governs how lenders report to the bureaus only in circumstances where they have reached an agreement with the borrower. In other words, if the borrower has been impacted by the COVID-19 pandemic, they must reach out to the lender to discuss the options of a temporary deferred payment plan or forbearance. If an agreement is reached to delay payments, the lender is expected to report the account status as “current” (assuming the account was not already late), along with the indication that the account is in forbearance (or deferred).

The lender may choose to report the special comment code AW (“affected by natural or declared disaster”). However, this comment, in and of itself, is not considered by the score. If the account is reporting as late, the score is treating it as late. Comments like “forbearance”, “deferred” or “impacted by natural or declared disaster” have no impact on the score. However, a comment like “forbearance” does imply that although the account may be reporting as “paid as agreed”, the borrower likely isn’t making their normal monthly payments.

If you have questions or insights related to how the pandemic is affecting the mortgage industry, please share them with us . We would like to help!