FHFA extends moratoriums on foreclosures and evictions until January 2021
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Millions of Americans are struggling with loss of income since the start of the coronavirus pandemic. This includes homeowners, many of whom are at risk of falling behind on their mortgage payments and losing their homes in the process. Fortunately, troubled homeowners benefit from a double relief: the possibility of putting down mortgages. abstention, and a ban on foreclosures and evictions for borrowers who were behind on their mortgage payments before the start of the pandemic.
Originally, this moratorium on seizures and evictions was due to expire at the end of December. But on December 2, the Federal Housing Finance Agency (FHFA) announced it was extending its foreclosure and eviction ban until January 31, 2021. This moratorium applies to mortgages guaranteed by Fannie Mae and Freddie Mac for single family units. It gives homeowners facing foreclosure a little more time before they have to worry about being evicted from their homes.
Obviously, extending the moratorium is good for desperate homeowners. But is this really enough help given the huge housing crisis that awaits us?
Homeowners Need More Relief
The current moratorium on foreclosures and evictions has been in effect since March 18, 2020. The FHFA says it protects more than 28 million homeowners with mortgages guaranteed by Fannie Mae and Freddie Mac, the government-sponsored entities that buy mortgages. As long as this ban is in place, mortgage lenders cannot proceed with foreclosure actions, nor can it proceed with foreclosures that were already underway before the pandemic.
In addition, lenders are still required to continue offering up to 360 days of mortgage. abstention when borrowers request it. This allows homeowners to suspend their monthly payments. Normally lenders can refuse forbearance, but now they have to agree to an initial 180 day period of suspended payments plus an additional 180 day extension on demand. They are not required to automatically extend the abstention. And although the borrowers will must catch up on their late payments once their forbearance period is over, lenders cannot demand a single immediate lump sum repayment.
What happens when the protections expire?
These protections have undoubtedly helped countless Americans avoid losing their homes or being evicted. But the question remains: what happens when these provisions expire? If the moratorium on foreclosures and evictions is not extended, some homeowners risk becoming homeless. Likewise, it is unclear what will happen to borrowers who reach the end of their 360 days of forbearance and are not in a better position to resume making mortgage payments.
Additionally, while these protections are designed to protect homeowners, many tenants also struggled during the pandemic. The Trump administration has put in place a moratorium on evictions for some tenants on September 1, which is expected to last until the end of the year. But for now, there is no indication that it will be extended.
Right now, lawmakers are trying to develop a second coronavirus relief package. But it is not clear whether it will include adequate housing assistance. And we may not know that for some time.