Foreclosure moratorium extended by FHA, Fannie Mae, Freddie Mac

September 2, 2020 Update: The Centers for Disease Control (CDC) issued a nationwide order to keep tenants affected by COVID-19 in their homes through December 31, 2020. The eviction moratorium applies to tenants who were eligible to receive an economic stimulus check through the CARES Act. Further, they need to submit a letter to their landlord stating they are unable to pay rent due to COVID-19.

The U.S. Department of Housing and Urban Development (HUD) along with the Federal Housing Finance Agency (FHFA) today 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 — it does cover tenants when they are facing eviction due to a foreclosure.

The FHFA has also extended their purchases of qualified loans in forbearance until September 30, 2020. These expansions include:

purchasing qualified loans in forbearance;
using alternative appraisal approaches;
using alternative methods for documenting income and verifying employment; and
expanding the use of power of attorney to assist with closings.

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 here in California and 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 California residents unable to make their housing payments. This jobs recovery isn’t likely to begin in a stable and consistent fashion until 2022-2023.

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