Cross my heart and hope to die!

It’s one of childhood’s most solemn oaths, still uttered by six-year-olds who hope it will convince one and all of their heartfelt intention to keep a promise. More convincing than “honest to goodness” or “cross my heart,” it is nonetheless a fairly counterproductive pledge. Since it needs to be said in the first place, the assurance can’t help but plant a seed of doubt.

As the Wall Street Journal points out, some Costa Mesa home loan applicants are already being called upon to make something like a cross my heart pledge. It comes as a new piece of paperwork in the form of the not-at-all childishly titled “Covid-19 borrower certification.”

The Home loan issuers are grappling with a problem created by the $2 trillion coronavirus stimulus package.  It allows struggling borrowers to ask for as much as 12 months of forbearance on mortgage loans backed by the feds. These pauses in payments provided a temporary fix that prevented some dire financial consequences that would otherwise have followed the abrupt closing of U.S. businesses—which would have triggered massive numbers of home loan forfeitures.

One possible self-defeating side-effect of the forbearance “fix” might have been bankruptcy for the home loan companies, suddenly faced with disastrously curtailed cash flow. To fix the fix, Freddie Mac and Fannie Mae offered to buy back the loans in forbearance—at a 5% or 7% discount. Though expensive, that did prevent the worst from happening. 

But now, in order to continue to issue new home loans, the mortgage companies needed to prevent their loan customers from immediately applying for forbearance—which would more than wipe out their profit margins. It was a brain-curdler, because, as one mortgage company executive pointed out, “You can’t control what customers do after you close.”

The solution is the Covid-19 borrower certification. It is a new document which basically asks borrowers to promise that they haven’t applied for forbearance previously and have no plans to ask for it going forward. In other words, they are promising not to seek forbearance and to make their regular mortgage payments: cross my heart; honest to goodness; no, really!

The good news from the Mortgage Banking Association is that the share of mortgages in forbearance has declined steadily over the past ten weeks—so it does look like the worst financial consequences of the pandemic have been averted for now. Costa Mesa home loan applicants are encountering more stringent credit requirements, but with sub-3% interest rates in prospect, the goal is worth aiming for.

More than ever, buying and selling Costa Mesa homes in this rapidly changing environment stands to benefit from the skills and insight of an experienced Costa Mesa real estate professional. We hope you’ll call!

We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976.  It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa  If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at



Posted by Matt Kanoudi on
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