September 24, 2020

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HUD Extends COVID-19 Foreclosure Moratorium For A Third Time

HUD Extends COVID-19 Foreclosure Moratorium For A Third Time

The FHA and HUD have announced a third extension of the coronavirus foreclosure and eviction moratorium announced earlier this year to help homeowners affected by the global COVID-19 pandemic outbreak.

This extension is extended until the end of 2020 and is intended to help those with FHA mortgages “focus on financial recovery”. The original measures were passed as part of the Coronavirus Relief and Economic Security Act, also known as the CARES Act.

According to a press release issued by the FHA and HUD, “This extension provides an additional four months of housing security to homeowners, as they will not fear losing their homes as they work to recover financially from the adverse impacts of the pandemic. “

HUD officials went on the record about this extension stating that, “…homeownership is the largest wealth builder for the majority of the nation’s families” and that offering this foreclosure relief, “from foreclosure and eviction to those who are in jeopardy of losing their hard-earned wealth, through no fault of their own,” is a priority for the agency.

The press release adds that the FHA Single Family foreclosure and eviction moratorium has been in place since March 18, 2020, and “continues to apply to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages.”

The moratorium, as it is written at press time, continues the prior moratorium policies including directions to participating FHA mortgage servicers to:

  • Halt all new foreclosure actions and suspend all foreclosure actions currently in process for FHA-insured single-family properties;
  • This order excludes “legally vacant or abandoned properties”;
  • FHA lenders must “Cease all evictions of persons from FHA-insured single-family properties” with an exclusion for vacant or abandoned property.

If you are able to continue making payments during the foreclosure moratorium, you are strongly advised to do so. If you cannot, you MUST make arrangements with your lender as this relief is not automatic. If you stop making payments and don’t contact your lender, your options become extremely limited when it comes to saving your home.

When you seek foreclosure relief during this moratorium, FHA lenders are required to do the following:

  • Offer borrowers with FHA-insured mortgages delayed mortgage payment forbearance at the borrower’s request;
  • There is an option to extend the forbearance for up to a full year.
  • FHA does not require a lump sum payment at the end of the forbearance period–talk to your lender about this detail;
  • Lenders are required to review borrowers who receive COVID-19 forbearance “for its special COVID-19 National Emergency Standalone Partial Claim before the end of the forbearance period. The COVID-19 National Emergency Standalone Partial Claim puts all deferred mortgage payment amounts owed into a junior lien which is only repaid when the borrower sells the home, refinances the mortgage, or the mortgage is otherwise extinguished” according to the FHA.
  • FHA lenders must also review borrowers who are not eligible for the COVID-19 National Emergency Standalone Partial Claim for one of FHA’s COVID-19 expanded home retention solutions announced in July 2020.

Contact your lender as soon as you know you may have difficulty making mortgage payments–this is the best way to get the most flexible options possible to save your home.

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