Foreclosure Moratorium Extended
The U.S. Department of Housing and Urban Development (HUD) along with the Federal Housing Finance Agency (FHFA) announced an extension of the foreclosure moratorium for single family homes.
The moratorium was previously extended until August 31, 2020, but now it is extended through December 31, 2020.
While this moratorium currently only impacts mortgages insured by the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac, this encompasses the majority of homeowners.
The moratorium is for single-family mortgages, but they do not need to be owner-occupied. It also extends the eviction moratorium for residents of real estate owned (REO) properties. However, the eviction moratorium does not cover tenants facing eviction due to an inability to make payments.
Fannie Mae and Freddie Mac have also asked servicers to offer additional relief to homeowners, in the form of:
- providing forbearance for up to 12 months;
- waiving assessments of penalties or late fees;
- offering loan modification options; and
- allowing a payment deferral solution in which deferred payments will be due at the end of the loan (rather than at the end of the forbearance period).
Delaying the inevitable foreclosure wave
The moratorium extension will keep homeowners housed through the end of the year, at least. This will undoubtedly help 2020’s housing market and economy, but it also just pushes off the inevitable.
2020’s underlying recession, complicated and worsened by the global pandemic, has caused historic job losses across the nation. Until jobs and incomes are restored — which will not occur before year’s end when the new moratorium expires — there will be millions of residents unable to make their housing payments. This jobs recovery isn’t likely to begin in a stable and consistent fashion until 2022-2023.