Certain Foreclosure Moratoria Set to Lift on July 31

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At the close of this month, certain moratoria on foreclosures and evictions are set to lift. While prior deadlines have been extended, it remains to be seen whether another continuance will be granted amidst an increase in the spread of the COVID-19 Delta variant.

Last month, the Federal Housing Finance Agency announced that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac extended their moratorium on single-family foreclosures and real estate owned (REO) evictions from June 30 to July 31. The foreclosure moratorium only applies to homeowners with a GSE-backed, single-family mortgage, and the REO eviction moratorium applies only to properties that have been acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. The extensions are implemented in Fannie Mae Lender Letter LL-2021-02 and Freddie Mac Guide Bulletin 2021-23.

The CDC also announced an extension of its current moratorium on residential evictions for nonpayment of rent through July 31, noting that “this is intended to be the final extension of the moratorium.”

In conjunction with the Biden-Harris administration and other federal agencies, the FHA also extended its foreclosure and eviction moratoria for all FHA-insured, single-family mortgages, except vacant or abandoned properties, through July 31. The FHA also continued its extension of the deadline for first legal action and reasonable diligence timeframes for 180 days after July 31, 2021, to provide servicers with the additional time needed to focus their work on assisting distressed homeowners.

To assist homeowners who remain at risk of falling behind on their mortgage payments due to COVID-19, the FHA extended the time period for homeowners to start new forbearance plans to September 30, 2021. Homeowners who have not previously been in COVID-19 forbearance can request this pause or reduction in mortgage payments.

The FHA established the COVID-19 Advance Loan Modification, which offers significant payment relief to eligible homeowners. This new home retention option is for those homeowners for whom a 30-year rate and term mortgage modification would bring the mortgage current and reduce the principal and interest portion of their monthly mortgage payment by at least 25 percent.

Finally, to assist seniors with Home Equity Conversion (reverse) mortgages who have been negatively impacted by COVID-19, the FHA is extending the ability for these homeowners to request an extension before the servicer may request that the loan be called due and payable. For extension requests received between July 1, 2021, and September 30, 2021, servicers must grant homeowners an extension of up to six months.

We will keep you posted on any further extensions here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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