Are you a homeowner with an FHA loan worried about your mortgage during the coronavirus pandemic?
If so, you aren’t alone. Coronavirus outbreak containment policies–lockdowns, quarantines, and other necessary measures, have brought with them economic hardship from many Americans; loss of income creates and questions about future earnings can result in late and missed mortgage payments, increasing the risk of foreclosure.
But during the pandemic, federal relief measures were drafted to help–and the FHA/HUD is no exception, requiring participating lenders to delay initiating or continuing foreclosures during the crisis.
Now, the Department of Housing and Urban Development and the Federal Housing Administration have issued an extension (actually the second extension since the crisis began) of the foreclosure moratorium announced in March.
The Old Deadline Wasn’t Sufficient
The HUD official site includes the new announcement, Extension of Foreclosure and Eviction Moratorium in connection with the Presidentially-Declared COVID-19 National Emergency, offering the extended moratorium on foreclosures and evictions on all FHA loans. All, that is, except for FHA-backed mortgages secured by “vacant or abandoned” properties.
In March 2020, the Department of Housing and Urban Development issued Mortgagee Letter 2020-04–a 60-day moratorium on foreclosure and eviction for FHA borrowers.
The goal? Avoid displacing home owners during the coronavirus pandemic. The original moratorium was extended from May 17, 2020 to June 30, 2020.
The New Moratorium
The new, extended moratorium expiration date is now August 31, 2020. According to the HUD press release, “The moratorium applies to the initiation of foreclosures and to foreclosures in process.”
The press release also mentions this action is separate from “any eviction moratorium applicable to lessors provided under the CARES Act, evictions of persons from properties securing FHA-insured Single Family mortgages, excluding actions to evict occupants of legally vacant or abandoned properties,” which are “also suspended through August 31, 2020”.
Borrowers who are in danger of foreclosure on an FHA mortgage should reach out to their loan servicers immediately. You and the lender will examine your circumstances, how many payments you have missed or are in danger of missing, and determine which course of action to save you from foreclosure may be best.
The key is to act as soon as possible because the more payments missed, the less flexible your foreclosure avoidance choices get.
The FHA lender may be able to offer a loan modification, loan forbearance, or other relief but these measures are not automatic. Borrowers must work with the lender to get the loan back in good standing.
Foreclosure moratoriums eventually expire and if you aren’t working with your lender you will eventually have to face the reality of the foreclosure process. Contact your loan servicer today to get started saving your home.