Short Extension to Foreclosure Moratorium
The federal mortgage foreclosure moratorium now doesn’t expire until March 31. It may extend through September 2021 if Biden has his way.
New Extension through March 2021
On the day of President Biden’s January 20 inauguration, the White House stated that:
he will ask the Department of Veterans Affairs, Department of Agriculture, and the Department of Housing and Urban Development, to consider extending foreclosure moratoriums for federally guaranteed mortgages and continuing applications for forbearance for federally guaranteed mortgages until at least March 31, 2021.
On the next day the Department of Housing and Urban Development (HUD) issued a Mortgagee Letter stating that
FHA [Federal Housing Administration]-insured Single Family mortgages, excluding vacant or abandoned properties, are subject to an extension to the moratorium on foreclosure through March 31, 2021. The moratorium applies to the initiation of foreclosures and to foreclosures in process.
Deadlines for the first legal action and reasonable diligence timelines are extended by 120 days from the date of expiration of this moratorium for FHA-insured Single Family mortgages, except for FHA-insured mortgages secured by vacant or abandoned properties.
As a result the covered mortgage servicers:
Can’t start or continue a foreclosure of a single-family regular or reverse mortgage (with the exception of legally vacant and abandoned properties)
Must give up to 6 months of mortgage forbearance if the financial hardship is because of the Covid-19 pandemic
Must give up to an additional 6 months of forbearance upon a homeowner’s extension request
At the same time the U.S. Department of Agriculture (USDA) announced
an extension of… foreclosure moratoriums on USDA Single Family Housing Direct and Guaranteed loans (SFHDLP and SFHGLP) through March 31, 2021. The actions announced today will bring relief to residents in rural America who have housing loans through USDA.
See that webpage for the USDA’s mortgage forbearance requirements.
The Department of Veterans Affairs has also acted. It stated that the “VA is working diligently to extend the foreclosure… [moratorium].” Accordingly, its website has been updated to say that VA-guaranteed mortgages now have a “foreclosure moratorium through March 31, 2021.” That FAQs page has additional information and resources.
Federal Housing Finance Agency’s (FHFA) Prior February 28 Extension
On the day before Biden’s inauguration the FHFA extended its prior moratorium for Fannie Mae and Freddie Mac mortgages through February 28, 2021. As of the writing of this blog post (Sunday, February 7, 2021), it’s not clear if the FHFA is extending their mortgages through March 31. However, it’s likely. Check with your mortgage servicer.
What’s Next? Another Extension through September 30, 2021?
Biden’s $1.9 trillion American Rescue Plan includes an extension of the current mortgage moratoriums to September 30, 2021. Last Friday, both the U.S. Senate and House of Representatives passed a “budget resolution” along party lines moving this forward. It will be several weeks before we see whether this will turn into law or not.
For More Information…
Please see our earlier blog post of May 5, 2020 for details about the foreclosure moratorium in the CARES Act. The current moratorium is largely an extension of what that major legislation included.
Also see “Help for homeowners and renters during the coronavirus national emergency.” It’s a good general resource, from the Consumer Financial Protection Bureau.
Last thing: even in the best of circumstances going through a mortgage forbearance is stressful. During the pandemic for many people the entire situation is mind-blowingly difficult. There have been many extensions of the foreclosure moratorium during the last year. So homeowners have been and still are constantly on the edge of a financial cliff as the deadlines approach, only to be extended again. It’s extremely difficult to make sensible decisions under these circumstances. A bankruptcy lawyer can help. This is the kind of stuff we help people with every day. Come see us and gain some peace of mind about how best to move forward.