The FHA and HUD are extending a moratorium on foreclosure-related evictions in a last-minute bid to protect FHA borrowers from losing their homes after the expiration of a previous eviction and foreclosure moratorium.
The HUD official site states that on July 30, 2021, FHA foreclosure and eviction procedures will still be on hold; the agency is extending its moratorium on foreclosures and evictions until September 30, 2021.
The previous deadline was at one time “set in stone” and HUD had previously announced there would be no further extensions.
But public outcry over the expiration of a rental eviction moratorium gave the Biden administration pause; soon there were extensions on the foreclosure and eviction moratorium for those who bought homes with government-backed programs like FHA single-family home loans.
In a press release issued by HUD, the agency explains the most current extension of the moratorium was approved in order to “avoid displacement of severely distressed borrowers and allow them time to access suitable housing options after foreclosure”.
The moratorium is also intended to offer borrowers more time to “…access federal, state, or local housing stability resources or to consult with HUD-certified housing counselors”.
Borrowers who get into trouble with their mortgages don’t have to experience loan default and foreclosure, but it is usually a matter of acting quickly enough once the borrower knows they are having financial trouble.
Any borrower who acts soon enough after experiencing the financial hardship may be able to sidestep the foreclosure process but you must contact the lender and request loan forbearance, loan modification, or related options prior to missing any payment.
Homeowners who feel they may need such measures should act quickly for another reason; at the time of this writing, FHA loan guidance for lenders on what to do once this suspension of foreclosure activities is lifted includes the following–once the moratorium is over, “foreclosures of FHA-insured mortgages may be initiated or resumed upon the expiration of the foreclosure moratorium in accordance with FHA requirements.
That means borrowers who were already experiencing a foreclosure before the moratorium may be right back to square one if they have not made other arrangements with the loan servicer.
Once the foreclosure process begins there may be no way to reverse the process–contact your lender now to avoid future surprises or misunderstandings. If you have an option to save your home, your lender should tell you–but always ask in any case.