“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 St. Cloud 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. St. Cloud 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 St. Cloud homes in this rapidly changing environment stands to benefit from the skills and insight of an experienced St. Cloud real estate professional. I hope you’ll call!

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