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Soto Introduces Legislation to Stop Balloon Payment Loophole for Homeowners

Representative Darren Soto has introduced the Save Our Homes Act (H.R. 6632), a bill that would create a simple, national plan for homeowners to save their homes from foreclosure in the midst of the coronavirus pandemic. Upon request, struggling homeowners receive a six-month forbearance plan and extension. After the forbearance period, they can begin making monthly mortgage payments. This would keep homeowners from being required to pay large balloon payments.

“The effects of the coronavirus are hard-hitting and being felt across all sectors of American life,” said Rep. Soto. “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.”




Central Floridians were devastated by thousands of foreclosures during the Great Recession. Learning from the lessons of the past, Congressman Soto’s bill will help stop this tragedy from striking again. Those who face foreclosure could get a well-needed reprieve to start their payments again. The Save Our Homes Act would lead to greater long-term stability for home values and the local real estate market, protecting the nest egg of millions of other homeowners who may not otherwise be financially affected by the COVID-19 crisis.

Under the CARES Act, a borrower with a federally-related mortgage loan experiencing hardship due to the coronavirus crisis may request forbearance to the borrower’s servicer for up to 180 days. While helpful, many borrowers have expressed concerns that servicers are offering a balloon payment option that would require the entire amount owed for the forbearance period to be paid at once. 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.

To ensure that those seeking the forbearance are the ones most in need and deter any fraudulent applications, the Save Our Homes Act will have a requirement to show a COVID-19 financial hardship, directly or indirectly, from a partial or total loss of income. Stimulus checks are not included in the income calculation. To qualify for forbearance, a borrower would have to have a mortgage-backed by any financial institution using RESPA accounts, which will qualify most Americans’ mortgages.

The legislation was co-sponsored by Representatives Jahana Hayes, Eleanor Holmes Norton, Frederica Wilson,  Kathy Castor,  Steve Cohen,  Joe Courtney,  Earl Blumenauer, and Elaine Luria.

The Save Our Homes Act can be found here.

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