During a COVID-19 press briefing at the White House on March 18, 2020, President Donald Trump announced that the Department of Housing and Urban Development (HUD) will temporarily suspend “all foreclosures and evictions.” The president made this announcement to provide “immediate relief” to homeowners and renters struggling to make rent and mortgage payments. The president’s announcement to suspend evictions and foreclosures is similar to the eviction and foreclosure moratoriums already implemented by a number of states and large municipalities, including New York, California, Denver, and San Antonio.
Following the president’s announcement, HUD released Mortgagee Letter 2020-04, which imposes a 60-day moratorium on evictions and foreclosures for all FHA-insured Title II Single Family forward and reverse mortgages. The moratorium announced in the mortgagee letter requires mortgagees to comply with the following on properties secured by an FHA-insured Single Family mortgage:
- Suspend the initiation of foreclosures and the completion of foreclosures in process for 60 days
- Suspend evictions of persons from properties for 60 days
The mortgagee letter also provides a 60-day extension to the deadlines of the first legal action and reasonable diligence timelines. Kathleen Kraninger, director of the Consumer Financial Protection Bureau, issued a statement commending HUD’s action and expressing support for “appropriate flexibilities” to benefit consumers.
In conjunction with HUD’s announcement, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac (the “enterprises”) to suspend foreclosures and evictions for at least 60 days for all enterprise-backed single-family mortgages. FHFA also reminded borrowers who are having difficulties paying their mortgage that they should contact their mortgage servicers to discuss options to keep their mortgage current.
Mortgagees with a mortgage portfolio including FHA-insured Single Family forward or reverse mortgages should immediately begin work to suspend foreclosures and evictions as required by Mortgagee Letter 2020-04.
Although many mortgage companies and portfolios are not directly covered by the HUD letter, additional government announcements may be forthcoming. Regulated mortgage entities must stay alert to what may become fast-changing guidance in this area – guidance that will likely have profound business, operational, and regulatory implications.