HousingWire
The FHFA order applies to the more than half of U.S. mortgages backed by Fannie Mae and Freddie Mac, and the FHA extension directs mortgage servicers to halt all new foreclosure actions and suspend all foreclosure actions currently in progress.
The Federal Housing Finance Agency on Wednesday extended the foreclosure and eviction moratorium for borrowers with mortgages backed by Fannie Mae and Freddie Mac until “at least” Aug. 31, the federal watchdog said.
“During this national health emergency no one should worry about losing their home,” said FHFA Director Mark Calabria, who oversees the two mortgage companies that back more than half of the outstanding mortgages in the U.S.
The FHFA will continue to monitor the COVID-19 pandemic and “update policies as needed,” the agency said in a statement.
The moratorium would primarily apply to the 2 million mortgages that were in default at the end of February, as measured by Black Knight. Both the delinquency rate and foreclosure rate for mortgages reached multi-decade lows before the pandemic began hitting the U.S. at the end of February.
While delinquency rates jumped in the first quarter from a record low in the final three months of 2019, as measured by the Mortgage Bankers Association, the number includes home loans that are in forbearance, meaning they’re not currently in danger of foreclosure.
Borrowers with Fannie Mae and Freddie Mac mortgages are eligible for forbearance of up to one year if they are impacted by COVID-19, as mandated by the CARES Act passed by Congress. But, borrowers have to be current on their mortgage payments to qualify.
According to Black Knight, the number of loans with suspended payments dropped to 4.66 million last week, the second consecutive week of declines, as states reopened their economies and workers returned to jobs. Measured as a share of all mortgages, forbearances dropped to 8.8% from 8.9% in the prior week.
Also on Wednesday, the Department of Housing and Urban Development announced that the Federal Housing Administration is providing a two-month extension of its foreclosure and eviction moratorium through August 31, 2020. This is the second extension the FHA has enacted since the COVID-19 pandemic began, the first was on May 14 when the moratorium was extended to June 30.
The single-family foreclosure and eviction moratorium extension applies to homeowners with FHA-insured Title II Single-Family forward and Home Equity Conversion mortgages. With this extension, the FHA intends to provide additional security and relief to homeowners attempting to financially recover from the current economic climate, a HUD release said.
“While the economic recovery is already underway, many American families still need more time and assistance to regain their financial footing,” said HUD Secretary Ben Carson. “Our foreclosure and eviction extension means that these families will not have to worry about losing their home as they work to recover from the financial impacts of COVID-19.”
The moratorium directs mortgage servicers to halt all new foreclosure actions and suspend all foreclosure actions currently in progress, excluding legally vacant or abandoned properties. It also directs servicers to cease all evictions of persons from FHA-insured Single-Family properties, excluding actions to evict occupants of legally vacant or abandoned properties.
The two-month extension is not the FHA’s first temporary policy change put in place to assist borrowers during COVID-19. At the beginning of June, the FHA enacted a policy shift aimed at borrowers who met all FHA requirements for a mortgage at the time of closing but were impacted by the pandemic before receiving the FHA’s endorsement for insurance on the loan.
The FHA does state that homeowners with FHA-insured mortgages must continue to make their mortgage payments if they are able to do so, or seek mortgage payment forbearance pursuant to the CARES Act from the mortgage servicer.